TRW Automotive Holdings (TRW +0.8%), BorgWarner (BWA +0.5%) and Delphi Automotive (DLPH +1.8%) look more attractive to Morgan Stanley's Adam Jonas than General Motors (GM -0.1%) and Ford (F +0.7%) on concerns that auto loan credit will tighten.
"Subprime as a percentage of new car sales has approached pre-crisis peaks and leasing is setting new records." warns the analyst in his note to clients.
The trio of auto parts makers could have more global upside potential than the Detroit automakers if the U.S. auto industry hits some speed bumps.
TRW Automotive (TRW -0.1%) has fallen more than 3% since it beat expectations in Q3 over worries that it may lose a $700M brake parts contract from GM, but Jefferies is "still positive on the name." The firm hiked its PT to $88 from $83.
Analyst Elaine Kwei counters by observing that the business TRW may lose has lower-than-average margins and thinks coming share buybacks are the dominant factor.