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I've written quite a few articles on the auto industry mainly focusing on Ford (NYSE:F) and Lithia Motors (NYSE:LAD) in the past couple of months because I believe this is an industry which is booming at least for 2013; and possibly longer. The average age of automobiles in the U.S. is roughly 11 years and consumers are looking to upgrade their clunkers into more fuel efficient vehicles. In my article on Lithia Motors I did say that I was a bit skeptical back in March with employment losses looming (sequestration) and consumers holding off on big purchases, but with a couple of healthy jobs numbers reported between then and now and healthy year over year car sales there is very good evidence that the average age of the automobile in the US will decrease eventually.

Lately I've wanted to shift my strategy to more of a defensive stance so I sold 90% of my position in Lithia Motors at an annualized rate of 55%. With my proceeds from the sale I have indeed increased my positions in defensive stocks such as ConocoPhillips (NYSE:COP), Abbott Laboratories (NYSE:ABT), and American Water Works (NYSE:AWK), but with the money left over I'd like to use it to buy a value stock in an industry that is booming: automobiles. I continue to like Ford as my favorite automaker but I'm not going to be adding to my position for now, instead I'd like to look for some pin-action for new autos to capture some more upside potential. That company I have in mind is Lear Corporation (NYSE:LEA). Lear designs, manufactures, assembles and supplies the seat systems, electrical distribution systems, and related components to auto manufacturers. Lear is a mid-cap stock with a market cap of 5.5B and is really undervalued with a trailing twelve month P/E ratio of 4.62 and a 1-yr forward looking P/E ratio of 8.92, personally I believe a P/E value under 15 is undervalued, so that tells you what I think about the upside potential available for Lear. The 5-yr forward looking PEG ratio is at a value of 0.33, again a value that I consider to be extremely inexpensive. Lear is projected to grow its EPS 24.6% for the next year and 14.2% for the next 5 years. Financially it returns 42.4% on its shareholders equity, 15.4% on its assets, and 27.7% on its investments; excellent values for any company all the way around. On top of all this, Lear pays you a not too shabby 1.15% dividend.

New car sales in the U.K. were up 14.8% year over year in April, Ford April sales were up 18% in the U.S., and auto sales will continue to be driven higher due to a recovery in the housing market and the wealth effect of job security and a rising stock market unlocking the demand for new vehicles. With all this good news around, Lear most recently reported EPS of $1.30 beating analyst estimates by $0.19 on excellent revenue of $3.9B which beat by $0.22B, thereby allowing the stock to shoot upwards at a trajectory of 6.4% on 25Apr13. Prior to the earnings announcement Lear announced that it would accelerate its stock buyback plan and repurchase $800M of its shares by year end on the existing $1B program, and in addition start a new $750M buyback program.

Lear appears to be making all the correct moves for its shareholders in terms of sales, share buybacks, and increasing its dividend within the past year. The icing on the cake that makes me want to buy this company's stock is that it is in the booming automobile sector. All my checks have not turned up any red flags which would make me shy away from getting into the stock, so therefore I have initiated a starting position and will continue to monitor it as time goes on. We haven't yet experienced the whole "Sell in May" phenomena yet, so I may be in for a rocky ride, but I feel pretty confident in my research.

Disclaimer: These are only my personal opinions and you should do your own homework. Only you are responsible for what you trade and happy investing!

Disclosure: I am long LEA, F, COP, AWK, ABT, LAD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.