American Axle & Manufact. Holdings, Inc. (AXL), General Motors Company (GM): Finding the Right Stock to Invest In

Lear Corporation (NYSE:LEA)’s valuations and strong balance sheet are pretty tempting. Though Lear Corporation (NYSE:LEA)’s seating business is expected to grow roughly in line with changes in light vehicle production overall, its high exposure to the GMT900/K2XX family of General Motors Company (NYSE:GM) full-size pickups and SUVs surely provides upside potential to 2013 Seating earnings. Moreover, the firm’s EPMS business seems to be a bright prospect.

This business is levered to secular tailwinds related to increased connectivity and electrification of the vehicle. Lear Corporation (NYSE:LEA)’s balance sheet is strong, and solid free cash flows are expected in the future, suggesting many opportunities for accretive acquisitions (likely along the lines of vertical integration, similar to its acquisition of Guildford Mills) and/or shareholder friendly activities.

My Foolish take

Both American Axle & Manufact. Holdings, Inc. (NYSE:AXL) and Dana Holding Corporation (NYSE:DAN) are recommended as neutrals as they lack a secular growth prospect, and hence, rely on improvement in industry/macro dynamics for improved profitability. Dana Holding Corporation (NYSE:DAN) has strong after-market exposure but that too is not strong enough to offset the company’s heavy reliance on macro economy. On the other hand, Lear Corporation (NYSE:LEA) seems to be a solid case given its growing EPMS business and strong balance sheet.

The article Light Truck Suppliers: Finding the Right Stock to Invest originally appeared on Fool.com.

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