|Written by GSCR Staff
|Monday, 06 May 2013 07:32
Good Morning. Today’s automotive theme is part of our seasonal buying strategy from our Goldman Guide for early May in bio-tech, leisure stocks, automotive, and casual dining. This may be particularly appropriate as there was good news related to U.S. Auto Sales last week amid a general price decrease in gas over the past month or so. Today’s stock is an automotive supplier that is poised to see a boost in the stock due to this seasonality effect and the recent good news.
Stoneridge, Inc. (NYSE – SRI - $7.63) is a high tech automotive supplier that designs and manufactures engineered electrical and electronic components, modules, and systems for cars and trucks, farm machines, motorcycles and off-highway vehicles. The Company is an international player with customers in North America, South America, and Europe.
SRI is a great play on this anticipated short-term rally in the automotive sector but is also a well- diversified company not only in terms of its products but its customers as well. The Electronics segment offers cutting edge products like driver information systems and instruments. The Wiring segment offers custom assembly for OEM instrument panels as part of its portfolio. The Control Devices segment offers products necessary to monitor vehicle activity and performance like sensors, switches, valves, and actuators, as well as other electronic products. Finally, the PST segment offers electronic vehicle security alarm systems as part of its line. The company continues to drive differentiation with the highest levels of technology.
Two recent examples illustrate the advanced technology and innovative products the company offers. First, the Optimo tool was released for use in the Tachograph workshop environment. What is this you may ask? A Tachograph records speed in simplest terms, but SRI uses this terminology in a broader sense encompassing all aspects of vehicle driver display. The new Optimo focuses on speed and ease of use, providing wireless programming and calibration for all radio style tachographs. The second example may sound simple but further illustrates the high level of sophistication as well as customer focus at Stoneridge. The company released two smartphone apps for existing customers, the Duo Mobile and the Tacho Center. These apps are targeted at on-highway semi-truck data tracking and performance data respectively.
The CAGR for top-line growth is 21% over last two years for Stoneridge. Estimates for EPS show growth to $0.75 and $0.83 for 2013 and 2014. Couple with that very bullish signals for the technical analysis in our favorite categories of MACD and EMA and SRI has room to rev up all the way to $9.50 by this quarter’s end.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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