Tuesday, November 6, 2012

"The trading weeks keep getting uglier, especially for the tech stocks. Time to bring on an old war horse that made it through the depression.

Dow Jones Industrial Average 13,118 (UP)  Week ending 11-02-2012

Thank you Hurricane Sandy for snapping off my 40 foot Pine tree like a twig and depositing it on my neighbors garage. They especially liked it since they have their house up for sale right now. But, I can't complain. New York and New Jersey probably have 80,000 people or more homeless from the storm between the two states. Staten Island, Long Island, NY, PA, and the New Jersey Coast communities all sustained major damage.

The stock trading week with the exception of one day was plug ugly. The NY markets were closed for two days because of flooding in New York City and Northern New Jersey with salt water flooding in the subway tunnels closing down trains. The New York Marathon an international event was first a go, then cancelled because resources were needed for the storm victims. So with all this turmoil, I turned to a stock that seems to always be steady regardless of market conditions or who is elected president.

BorgWarner Inc.  (Symbol BWA, $66.35) Return on Equity 18.76% PEG ratio 0.80

 1928 - Borg-Warner Corporation is formed. Founding companies include Borg & Beck (Holley carburetors), Marvel-Schebler, Warner Gear and Mechanics Universal Joint. The company was one of the ones that made it through "The Great Depression" of 1929 and came out on the other side to prosper.

Currently the company is projecting at $4.99 per share for 2012 and for 2013 it is looking like $5.61 per share.

Although this company's stock is down (4.81%) , the 3 year Total Return on the stock is a lofty 108.36%. The 5 year earnings growth here is a turbo-charged 16.35%  and the 5 year sales growth has been 6.71% percent which is a good pace for a company with 7.1 billion dollars in sales. 

One interesting note here for a hardware company, "Inventory Turnover" has run 11.57 turns a year, which is excellent operationally. 

Nov 6 (Reuters reported) - BorgWarner Inc will attract $2.3 billion in new business from 2013 to 2015 as automakers around the world rely more heavily on turbochargers and other fuel-saving technologies to meet stricter gas mileage and emissions requirements.

About half those sales will come from Asia, which accounted for 35 percent of BorgWarner's new business from 2010 to 2012, the U.S. auto parts supplier said on Tuesday. China, the world's largest auto market, will make up about one-third of new sales.
The largest two shareholders are:  The VANGUARD GROUP, INC. and JP MORGAN CHASE & COMPANY currently.
All in All , a good quality stock that meets our Return on Equity and Peg ratio criteria. 
Election day Tuesday , 11-6 in the USA, so lots of news to follow next week.
Make sure to vote!

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