Profile: TRW Automotive Holdings Corp., together with its subsidiaries, designs, manufactures, and sells automotive systems, modules, and components for automotive original equipment manufacturers and related after-markets. It operates in three segments: Chassis Systems, Occupant Safety Systems, and Automotive Components
Market Cap: 1.9B
Website: http://www.trwauto.com/Trading Thesis:Short term play, based on TA and FA.
This is a solid company, with strong 2010 estimates despite an expected 'slow' 2009.
The stock is trading at 14X 2010 earnings while the sector trades at 61X 2009.
The chart shows a strong upward trend with 2 main legs, our goal is to catch a 'third' leg with 5% of portfolio exposure.
Supports @ 16 and 14
Resistance @ 20
From a recent research note by Bank of America / Merrill Lynch:
QuoteTRW Automotive (TRW)
TRW is a high quality auto supplier with proprietary technology and decent
diversification. Also, bank covenant relief should be instrumental to the
company's survival. Our PO of $22 represents a P/E of 14X and an EV/EBITDA
of 5X an average of our 2010 and 2011 estimates, which is in-line with historical
ranges.
Upside risks to achieving our price objective
1) a meaningful recovery in the auto sales cycle,
2) strong cost performance,
3) a rapid drop in raw material costs.
Downside risks:
1) a slower than anticipated recovery in auto sales,
2) weaker than expected cost performance,
3) a continued increase in raw material costs
Trading Plan:Buy 5% @ the open, stop @ 15 and limit sell @ 27.5