Sunday, January 25, 2015

"Automotive Parts stocks in general do pretty well in the stock market. Here is one that meets all my criteria, Delphi Automotive PLC (Symbol DLPH). Also one Special situation play with the Shake Shack IPO (Symbol SHAK), coming this week."

Dow Jones industrial Average 17,673 (Down) Week ending 01-23-2015

I seem to just love these transport stocks that begin with the letter "D". This one I found as a holding in the Vanguard Midcap Value Index fund as a top 10 holding. My company had just switched over our 401K plans over to Vanguard Funds, so I thought I would go in and take a look around.

Delphi Automotive PLC (Symbol DLPH, $69,67) is a leading global supplier of technologies for automotive and commercial vehicle markets with headquarters in Gillingham, United Kingdom.

Delphi meets my base criteria with flying colors with a Return on Equity of 46.12% and having a PEG Ratio of 0.96. (They were able to produce this fine return on equity number without running up excessive long term debt.)

My favorite thing about the company is that they employ 117,000 people worldwide. We need more companies in the world like that! Another good thing about Delphi is that they are buying back $1.5 Billion dollars of their stock so they are very confident in their future business prospects.

Delphi, (DLPH), has annual Revenue of $17.1 Billion dollars and 1 Year earnings growth has been 10.8% and the 3-5 year current earnings growth forecast is projected to be 12.7%, with a current PE, (Price to Earnings ratio), of 16.14 and a forward PE of 13.71 per share.

Earnings per share for 2015 are projected at $5.05 per share and for 2016 it is looking like $5.64 per share. (per CBS MarketWatch). The company also pays a dividend at a yield rate of 1.4%. I would say that you can go ahead and buy the shares right here and have a margin of safety for a 3 year investment.

I have a "two for" for you for this week. A SPECIAL situation occurrence and a way to trade it. This is just a fun trade idea. 

The IPO of Shake Shack (Symbol SHAK), comes public this week with 5 Million shares priced at around "$14 to16 dollars". The shares will come public on Friday January 30th.

Unless you are a preferred customer of Goldman or Morgan Stanley you will probably not be able to get in on the subscription for the public offering price. But, I believe that some of the other new restaurant stocks will be carried forward and up on the coattails of this public stock offering and allow you to profit on the offering. 

Here are the two stocks I think you can buy going into this Friday and have a trade:

Zoe's Kitchen Inc. (Symbol ZOES, $30.55) which currently has a 100+ stores and are expanding out to 1600 stores.

Zoe's Kitchen, Inc. operates restaurants. The company operates its business through a single segment, fast casual restaurant serving a distinct menu of fresh, wholesome, Mediterranean-inspired dishes delivered with Southern hospitality. Zoe's Kitchen was founded by Zoë and Marcus Cassimus in 1995 and is headquartered in Plano, TX.

and second :

El Pollo Loco Holdings Inc. (Symbol LOCO, $26.15)

 El Pollo Loco, Inc. develops, franchises, licenses and operates quick-service restaurants under the name El Pollo Loco. The company specialize in flame-grilled chicken in a wide variety of contemporary mexican-influenced entrees, including specialty chicken burritos, chicken quesadillas, chicken tortilla soup, pollo bowls and pollo salads.

 Both of these stocks and also Shake Shack, if you believe in Peter Lynch's idea to buy the simple things you know around you, should be very good long term investments as they expand through the years. 


So a trade, or a long term investment, you decide!



1 comment:

  1. Delphi Automotive (DLPH) ended the day at $77.16 . 2-6-2015 . This was a nice trade move up from the $69 and change entry point, some 12%. Freewilly