Time to buy Europe-heavy parts suppliers: JPMorgan

After four months of ‘decent’ European auto sales, the time is right to buy into some beaten down auto parts suppliers with operations on the continent, according to Himanshu Patel, JPMorgan analyst.

European auto sales came in at 12.8 million units on a seasonally adjusted annual rate [SAAR] in November, their highest point in the past four months, according to J.D. Powers figures. But Mr. Patel noted that since August, European auto sales have not dipped below 12.3 million vehicles despite all the doom and gloom on the continent.

He said the boost in auto sales is primarily being driven by rising sales in country’s like Germany and Italy, while smaller countries, like Belgium, are seeing substantial declines.

“While the European SAAR could very well still take step down in [the first half of 2012], it is hard to ignore four consecutive months of decent SAAR data,” Mr. Patel said.

He also said he believes the market has already priced in much of the downside risk for Europe-heavy parts suppliers. As a result, he said it may be time to buy into company’s like TRW Automotive Holdings Corp., Magna International Inc., Autoliv Inc., and Tower International “at least as a trade into the January Detroit Auto Show when 2012 guidance clues will emerge.”

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