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Frank J. Constantino
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Mr. Frank J. Constantino, of Beckley, W.Va., is an educated private investor with 15 years of experience. Constantino follows the financial markets closely and provides opinion through Seeking Alpha. He was recently named in the "Who's Who of Wall Street" by Wall Street Economists for... More
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  • BorgWarner (BWA) - Outperform

    BorgWarner Inc (NYSE:BWA)     12/02/2010     Outperform


    Price: $65.27  12/2/10

    Market Cap: $7.2 bil

    Book Value: $20.26/share

    Price to Book: 3.22

    Annual Sales: $5.3 bil

    Profit: $318.4 mil

    Profit/share: $2.80

    Expected Profit/share: $3.36

    PE: 24.66

    Dividend: 0

    Yield: 0%

    Debt: $1.0 bil


    Company Profile

    BorgWarner Inc. is a product leader in highly engineered components and systems for vehicle powertrain applications worldwide. The company operates manufacturing and technical facilities in several countries. Customers include Ford, DaimlerChrysler, General Motors, Toyota, Caterpillar, Navistar, PSA and VW Group. (Company Press Release)


    Reason for Outperform Rating:

    Auto sales are showing a stronger than expected recovery in recent months.  BorgWarner is the world leader in manufacturing fuel efficient drive train and engine components.  Countries world-wide are imposing new fuel efficiency standards for passenger automobiles.  I see this as a positive for BWA's future earnings.  Although the stock has had a recent run up in price I see a long-term opportunity for increased earnings and PE expansion.  BWA is currently trading at approximately 16 times next years earnings.  I recently wrote favorably about the company on Seeking Alpha's Instablog.  The article can be found at



    Although BorgWarner has a large global presence, including emerging markets, another downturn in US auto sales would negatively impact future earnings and therefore stock price.  Rising fuel costs are not a risk for BorgWarner since this drives more people to choose fuel efficient vehicles.  This would only be a risk if there was a large price spike in gasoline that caused a decrease in auto sales.


    Recent News

    BorgWarner Shares Turbocharged


    BorgWarner Introduces New Series of Turbochargers for Aftermarket Performance Customers


    BorgWarner's New EFR Turbochargers Boost 2011 LMP2 Engine and CR-Z Hybrid Race Car for Honda Performance Development


    BorgWarner's Variable Cam Timing with Mid Position Lock Named 2011 Automotive News PACE Award Finalist


    About Investopia

    Investopia uses social media to provide open commentary and discussion on financial markets, stocks, and other derivatives.  Investopia does not provide financial advice.  Any article, rating, or other commentary should not be considered as a recommendation to trade or hold any security.  Please consult your financial professional before making any investment decision.

    Disclosure: Long BWA
    Tags: BWA
    Dec 02 7:13 PM | Link | Comment!
  • Buy General Motors? Buy Borg Warner (BWA)
    Buy General Motors? Buy Borg Warner
    General Motors (NYSE:GM) re-joined the party last week.  By "the party" I mean the stock market party.  After GM began trading on Thursday shares traded up to about $36 per share before pulling back close to the IPO price of $33 at one point on Friday.  GM will probably be a good long-term investment as the company has been primed for profitability.  
    With that said I prefer buying Borg Warner (NYSE:BWA).  BWA is the leading auto parts manufacturer of fuel efficient engine and drivetrain components.  Barron's wrote favorably about the company last week, Borg Warner Gears Up For Growth, November 15, 2010.
    According to Barron's GM accounts for only 1% of Borg Warner's revenue.  In addition the US has been slow to adopt the fuel efficiency standards that other countries have already adopted. That leaves lots of upside for BWA.  China is currently filling a seemingly insatiable demand for autos, also fueling BWA stock.
    BWA isn't exactly cheap at close to 16 times next year's projected earnings.  However the company is the market leader and is trading at a discount to its historic multiple.  With an improving economy, stricter fuel standards worldwide, and growing emerging markets Borg Warner should power ahead.

    Disclosure: No positions

    Disclosure: No positions
    Nov 21 10:02 AM | Link | Comment!
  • The Best Dividend Stock - If I Could Only Own One

    The Best Dividend Stock - If I Could Only Own One

    Interest rates are low.  We here this every single day as if we didn't know that already.  Why not take advantage of the low interest rates instead of complaining about them?  No, I am not talking about bonds.  I am talking about preferred shares.  The iShares S&P US Preferred Stock Index Fund (NYSEARCA:PFF) to be exact.  Yes, the name is a mouthful.  The yield is even bigger.  PFF yields a juicy 7.32%. 

    There is another benefit.  PFF pays out monthly dividends, so if you are reinvesting your profits it makes compounding that much greater.  Preferred shares are corporate shares that trade similar to bonds because of their stated yields.  They do not having voting rights like common stock.  In many cases they are less liquid than common stocks therefore a little more difficult to trade.  That's why I would choose this ETF.  PFF gives you a basket of 93 holdings to spread your risk.  Be aware that most of these holdings are financials so you will be increasing your exposure in that sector.

    In a world where interest rates are low take advantage of them.  When they rise it will hurt the performance of this fund.  However with rates likely to stay low for a while longer you still have time to profit nicely from PFF.

    Disclosure: Long PFF
    Nov 19 10:41 AM | Link | Comment!
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