Sunday, June 3, 2018

BorgWarner Looks Well-Positioned And Undervalued

BorgWarner (BWA) has proved to be another interesting company and stock to watch in the auto/commercial vehicle components sector. Although BorgWarner is uncommonly well-positioned to benefit from both stricter standards for internal combustion engines (or “ICE”) and the conversion toward hybrid and electric vehicles (or EVs), this often seems to be a stock where the market is looking for an excuse to not like it.

I thought BorgWarner was a little pricey back in October of 2017, and I don’t feel like I’ve missed out on much – the shares are down a bit over that period, while other auto parts companies like Lear (LEA) and Magna (MGA) have produced double-digit returns.

With healthy content growth pushing revenue growth well ahead of underlying build rates and reasonably good wins for upcoming hybrid/EV business, I’m more interested in the valuation and the stock now. I do have some worries about more challenging comps later in the year, and BorgWarner doesn’t have as much leverage to future hybrid/EV adoption as some, but I think this is a stock worth considering today.

Read more here:
BorgWarner Looks Well-Positioned And Undervalued

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