Stocks & Investing
Mon, August 22, 2011Fri, August 19, 2011JCI, MGA, Auto/Truck - OEM Stocks Undervalued
Published in Stocks and Investing on Monday, August 22nd 2011 at 6:32 GMT by WOPRAI
August 22, 2011/ M2 PRESSWIRE / BUYINS.NET / http://www.squeezetrigger.com is monitoring the Auto/Truck - OEM sector and these stocks are the most undervalued as of today. JOHNSON CONTROLS INC (NYSE:JCI), MAGNA INTERNATIONAL INC (NYSE:MGA) are all expected to go Up as they are Undervalued according to industry standard valuation metrics. The valuation model employs a three-factor approach to stock valuation using fundamental variables--the company's trailing 12-month Earnings-Per-Share (EPS), the analyst consensus estimate of the company's forecasted 12-month EPS, and the 30-year Treasury yield--to create a highly accurate reflection of a company's fair value.
The chart below displays the projected Fair Value and Valuation discount/premium of the most undervalued stocks in the highlighted industry group:
Symbol Company Name Last Close Fair Value Valuation Industry
JCI JOHNSON CONTROLS INC 28.83 45.96 37.30% Undervalued Auto/Truck - OEM
MGA MAGNA INTERNATIONAL INC 33.58 60.06 44.10% Undervalued Auto/Truck - OEM
Here are some of the variables that are utilized when calculating the Fair Market Valuation of a stock: Long-run EPS growth rate, Duration of Business-growth-cycle, Volatility of EPS growth rate, Systematic or beta risk of the firm, Correlation between the firm's EPS and the interest rate environment, EPS growth volatility, Dividend payout ratio, Buffer earnings, Interest rate related criteria: Interest rate (30 year yield) long-run level, Duration of interest rate cycle, Interest rate volatility. The Fair Market Valuation uses 12-month historic and forecasted EPS values and the current 30-year treasury yield as primary determinants. When calculating risk/return values such as the Sharpe ratio, the historic periods used are five years.
Some expected results of the Valuation Model are: the valuation of a stock increases in a declining interest rate environment. Increasing current and/or projected EPS will produce a higher Valuation. While long-term EPS growth would produce a corresponding long-term Valuation increase, concomitant long-term interest rate increases would offset EPS growth and depress the Valuation. The shorter a company's own business cycle, the higher its stock Valuation will be.
JOHNSON CONTROLS INC (NYSE:JCI) - Johnson Controls, Inc. engages in building efficiency, automotive experience, and power solutions businesses worldwide. Its building efficiency business designs, produces, markets, and installs integrated heating, ventilating, and air conditioning systems, as well as building management systems, controls, and security and mechanical equipment. This business also provides technical services, energy management consulting, and operations of real estate portfolios for the non-residential buildings market. In addition, this business offers residential air conditioning and heating systems, and industrial refrigeration products. The companys automotive experience business designs and manufactures interior products and systems for passenger cars and light trucks, including vans, pick-up trucks, and sport/crossover utility vehicles. It offers seating systems and components; cockpit systems comprising instrument panels and clusters, information displays, and body controllers; overhead systems, such as headliners and electronic convenience features; floor consoles; and door systems. This business also produces automotive interior systems for original equipment manufacturers. Its power solutions business produces lead-acid automotive batteries serving automotive original equipment manufacturers and the general vehicle battery aftermarket. This business produces lead-acid batteries, as well as offers absorbent glass mat and lithium-ion battery technologies to power hybrid vehicles. The company was formerly known as Johnson Electric Service Company and changed its name to Johnson Controls, Inc. in 1974. Johnson Controls, Inc. was founded in 1885 and is headquartered in Milwaukee, Wisconsin.
MAGNA INTERNATIONAL INC (NYSE:MGA) - Magna International Inc. operates as an automotive supplier in North America, Europe, and internationally. The company designs, develops, and manufactures automotive systems, assemblies, and modules and components, as well as engineers and assembles vehicles primarily for sale to original equipment manufacturers of cars and light trucks. It offers interior, exterior, seating, power train, closure, roof, body and chassis, vision, hybrid and electric, and electronic systems, as well as vehicle engineering and contract assemblies. The company was incorporated in 1961 and is headquartered in Aurora, Canada.
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