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Auto and truck related stocks have been heating up recently. Very strong car sales in the United States and even in other parts of the world like China have been driving solid growth and profits for many companies in this sector. Shares of General Motors (NYSE:GM) and Ford (NYSE:F) are already up about 50% from 2012 lows. It seems as if investors are finally giving these companies credit and worrying less about another financial crisis in Europe, or about other concerns that have held these stocks back for too long. While these stocks are not as cheap as before, both still offer long-term value and upside as sales are expected to remain strong for the foreseeable future.

A recent Bank of America (NYSE:BAC) research report predicts that 2013 could be another big year for auto and truck sales. It also says that U.S. vehicle sales could hit a new high of 18 million units by 2018. If currently strong levels of sales continue and reach new highs in 2018, that could mean nearly 5 more years of sales growth for companies in this sector. Plus, it's not just consumers that are buying more cars and trucks, businesses are also buying more vehicles.

Because of this, it makes sense to do some buy and hold investing in this sector. Both Ford and General Motors shares appear undervalued and have additional upside potential for longer-term investors. However, there are a couple of stocks related to this sector that could be poised to double. Let's take a closer look at Ford and GM, and then a tire maker and a specialty vehicle manufacturer that appears deeply undervalued and poised to benefit from increased sales of commercial vehicles.

Ford Motor Company has become a great turnaround story thanks to some very good management decisions over the past several years. A few years back, Ford hired a former Boeing (NYSE:BA) executive named Alan Mullaly to be CEO. Under his leadership, this company has prospered in a number of ways. The balance sheet has strengthened, a dividend for shareholders has been reinstated, profits are up, and the company has introduced a number of popular new models with a focus on fuel-efficiency.

For many investors, Ford is the automaker of choice. This is because it does not have the government ownership that GM has. Furthermore, it offers an above-average yield of 3.1%, and it has seen less (top-level) management turnover when compared to GM. Analysts expect Ford to earn $1.40 per share in 2013, and $1.68 in 2014. Based on that, Ford shares appear to have additional upside for long-term investors, however, risks in Europe remains, so it makes sense to buy on pullbacks.

Key Data Points For Ford From Yahoo Finance:
Current Share Price: $13.17
52-Week Range: $8.82 to $14.30
Dividend: 40 cents which yields 3%
2013 Earnings Estimate: $1.39 per share
2014 Earnings Estimate: $1.67 per share
P/E Ratio: about 10 times earnings

General Motors, Inc. shares have rallied sharply off the $19 level it hit last Summer, but even at about $28, this stock has longer-term upside potential. This company owns some of the best-known brands in the car business which includes Cadillac, Chevy, Buick, and it has popular models like the Corvette, and Camaro.

General Motors has been challenged by weak auto sales in Europe, but this has been offset by strength in the United States and China. The Buick brand happens to be quite popular in China and as more consumers in that country see rising incomes, the bigger that market will become for all automakers. A significant stake in GM is still held by the U.S. Government and that will probably continue to hold the stock back until those shares are sold.

Analysts expect GM to earn $3.39 per share in 2013. That puts the current price to earnings ratio at about 8, which is well below the market average. Furthermore, earnings are expected to grow significantly (especially if Europe improves), to about $4.35 in 2014. The four catalysts for this stock in the next couple of years could be earnings growth, the sale of government-owned shares, improved results in Europe, and the potential for a dividend to be initiated. In January, Deutsche Bank analysts reiterated a buy rating and set a $38 price target which would imply upside of about 35%.

Key Data Points For General Motors From Yahoo Finance:
Current Share Price: $28.10
52-Week Range: $18.72 to $30.68
Dividend: none
2013 Earnings Estimate: $3.39 per share
2014 Earnings Estimate: $4.35 per share
P/E Ratio: about 8 times earnings

Now let's take a look at two stocks that trade in the automotive and commercial vehicle sector that could be poised to double in value:

Supreme Industries, Inc. (NYSEMKT:STS) appears to be one of the most undervalued stocks in the automotive and vehicle sector. This company manufactures specialty and commercial vehicles, buses, truck bodies, armored vehicles and other related products. Some of these specialized products include armored SWAT vehicles, "Kold King" insulated van bodies for refrigerated transportation, moving vans, "StarTrans" hotel shuttle vans, landscaping trucks, security vehicles, etc. If you have ever taken a hotel shuttle bus, there is a good chance it was built by this company.

Supreme is based in Indiana, and was founded in 1974. It has five manufacturing sites, and three service and distribution centers in geographically strategic locations. This allows it to sell and service its vehicles nationally. With a diversified range of products that are geared towards a wide variety of industries, this company appears poised to benefit from an economic recovery. Furthermore, this company is not as well known as some firms in this sector and that appears to be creating a solid opportunity to buy cheap now, before a wider range of investors discover the earnings growth and price to earnings multiple expansion potential that this company and its stock offers.

Supreme shares could double from current levels and it would still offer a solid value for a number of reasons. First of all, this company reported earnings of 77 cents per share for 2012. Analysts expect the company to earn about 82 cents per share in 2013 and around 86 cents per share in 2014. That puts the price to earnings ratio at just 4.4 times earnings. Other stocks in this sector like Ford and sell for about 10 times earnings, or even more. That is why Supreme shares could double and jump to around $8. It also used to trade at $8 to $9 per share before the financial crisis. Even at $8, the stock would still just be trading for less than many of its peers. This stock also looks cheap as it trades below book value which is $4.41 per share, while most stocks trade significantly above book value.

If that is not enough, the company even has a solid financial footing with only about $15.5 million in debt and annual sales of around $286 million. Another big positive is that insiders have been repeatedly buying shares in recent weeks. Edward L. Flynn, (a director) purchased 10,000 shares on February 13. Then he bought 8,100 shares on February 14, 1,900 shares on February 18, 2,425 shares on February 19, and 10,000 shares on February 20. Another director, Thomas B. Hogan Jr. purchased 2,000 shares in late December, and another 4,000 shares on February 24, 2013. This solid and steady accumulation of shares could be a another sign that the stock is undervalued and poised to move higher in 2013.

Furthermore, Supreme shares appeared poised to make new 52-week highs soon as it is now within striking distance of the current high, which is $4.66. Making the new highs list could attract more investors, creating a "breakout" and additional upside momentum. With a strong balance sheet and cheap valuation, the downside risk seems limited, unless the U.S. slips into a recession, but that does not seem likely at this time. It's also worth noting that due to a very attractive valuation and rebounding profits, this company could be a potential takeover target, from either another larger firm or a private equity company. However, in the long-run, shareholders might make even bigger gains in this stock if it remains independent.

Key Data Points For Supreme Industries From Yahoo Finance:
Current Share Price: $4.10
52-Week Range: $3.01 to $4.66
Dividend: none
2013 Earnings Estimate: 82 cents per share
2014 Earnings Estimate: 86 cents per share
P/E Ratio: about 4.4 times earnings

Goodyear Tire (NASDAQ:GT) appears deeply undervalued but the stock has started to creep higher and it even is within striking distance of a new 52-week high. Goodyear is one of the most recognizable brands in the world and many consumers are familiar with the Goodyear Blimp. This company makes tires under that mark, but it also owns other world famous brands like Dunlop. In addition to being a major tire manufacturer that produces for many of the largest automakers, it also sells replacement tires to the general public through a number of retail auto service and tire installation centers that it operates throughout the United States.

During a recession, consumers and businesses sometimes delay tire replacement and new car purchases. However, new cars sales coming in strong, and with signs that the U.S. economy is improving, consumers are more likely to start replacing old tires with more frequency. Consumers and businesses are also likely to drive more and therefore wear out tires sooner. For example, a business that sees more demand might need to make more service calls and a consumer who might have been unemployed might start commuting if a new job is landed. These are just some reasons why Goodyear could really benefit from a rebounding economy.

Analysts expect Goodyear to earn about $2.05 per share in 2013, and for earnings to surge about 20% in 2014 to around $2.52 per share. With the stock trading at just about $13, this puts the price to earnings ratio at 6.5 times. Of course, it is even lower when you look at what the company might earn in 2014. If Goodyear starts to see consistent revenue growth as the economy improves, investors might give this world-famous company a higher multiple. The combination of higher earnings and multiple expansion could set this stock for big gains. For example, if the company earns $2.48 per share in 2014, and the price to earnings multiple expands to only about 10, that would imply a share price of about $25 in the next couple of years. That is almost twice the current share price.

While some analyst price targets (which are typically set for where they believe a stock will trade in the next 12 months) may not be implying a double yet, some are already seeing the upside potential in Goodyear. Goldman Sachs (NYSE:GS) has a "buy" rating and it set a $17 price target. On February 13, Deutsche Bank (NYSE:DB) analysts reiterated a buy rating on the stock and set a $18 price target. This would give investors upside of roughly 50%. While another recession or a major rise in raw material expenses are risk factors that could put pressure on this stock, the upside potential seems to outweigh those concerns. Furthermore, those price targets could have room to go higher if Goodyear delivers on earnings estimates in 2013 and 2014.

Key Data Points For Goodyear From Yahoo Finance:
Current Share Price: $13.27
52-Week Range: $9.24 to $14.65
Dividend: none
2013 Earnings Estimate: $2.05 per share
2014 Earnings Estimate: $2.52 per share
P/E Ratio: about 6.5 times earnings

Data is sourced from Yahoo Finance. No guarantees or representations are made. Please consult a financial advisor before making investments.

Source: Ford And GM Are Undervalued, But These 2 Auto Sector Stocks Could Double