“Crack this “Misunderstood” Stock… And Unlock a Fortune!”

By Travis Johnson, Stock Gumshoe, August 10, 2008

For your Sunday reading pleasure — this is a solution sent in by a fearless Canadian reader who likes to call himself “Tease This!” I haven’t done much more than a touch of editing and have not researched the company at all … but perhaps it will pique your curiosity and get you diggin’. If so, feel free to let us know what you think.

The ad is for the Motley Fool Stock Advisor, the flagship newsletter from the Gardner brothers … we can make fun of them for pushing Whole Foods as the New American Super Brand for as long as they have (close to 2 years now, while the shares have fallen by well over 50%), but they do have a good long term record overall (beating the market for the last three and five year periods).

What do they want us to buy today?

“We’re talking a rare breed of stock. A single investment that combines the staggering power of the best growth stocks… with the equally awesome wealth-building power of acquiring them at a big discount.

“Our founding Fools, David and Tom — whose total average return is 40% while the S&P 500 is up just 4% — call these underappreciated value stocks with explosive growth potential “misunderstood.”

“Which is our way of saying “the market doesn’t get it.” IN FACT, most people might not even recognize such an investment is possible…

“Yet for the group you’ll meet in a second, this could be another historic moment!”

And then, the specific stock that Tease This! sniffed out for us:

“A misunderstood sleeper industrial company… with green solutions!

“Now consider this unloved, gritty multibillion-dollar auto parts manufacturer has already enjoyed revenue growth of 12% a year for more than a decade, rewarding astute investors 15% annualized gains.

“And these returns are accelerating… In the past FIVE years, its stock price has grown at a staggering annualized rate of 19%. And since the stock is currently bargain priced relative to its potential, this trend looks to continue for many years to come.

“[This company’s] breakthrough turbo technology improves diesel emissions.”
— Fox Business, June 19, 2008

“But here’s why we must act fast: Wall Street is beginning to catch on… A few weeks ago, Citibank and Wachovia upgraded this company to a “strong-buy.” And the herd can’t be far behind… Morgan Stanley, UBS Warburg, Merrill Lynch, JPMorgan, Goldman Sachs, and Deutsche Bank are still calling it a ‘hold.'”

Tease This! tells us that this company is certainly …

Borg Warner Inc. (BWA)

So, since this is a lovely Sunday in August, I’m guessing that there are about three of you reading this today. Whaddya think? We looked at another old school industrial company in Corning that’s also working at greener engine technology (in their case, diesel particulate filters), but otherwise I haven’t looked at any auto sector stocks for a long time (except for the good ‘ol “electric car” promises that we see every now and again).

It is perhaps the nicest day we’ve had in Washington, D.C. since May, so that’s enough from me … throw this one around, or go back to your cold drink with an umbrella, your choice. I’ll be back in business on Monday, I’m planning on digging into some “sin” stocks for your dirty, stinky, and soused pleasure …

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This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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10 Comments on "“Crack this “Misunderstood” Stock… And Unlock a Fortune!”"

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Paul Yoquelet
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when will Carrottrader set up a way to sign-up without using Paypal.

farley 5
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farley 5

BWA presents an intereesting pattern. A print at $45 breaks the second double top. Trendline is at $48 so you would need to see how it trades there. Breaking $38 is a tripple bottom and not good. Could send the stock to around $21.

http://stockcharts.com/def/servlet/SC.pnf?c=bwa,P

If you own this one, how about selling the January $45 calls for around $4.40. Static return is around 20% and gives you 8% downside protection. Be sure to read the options disclosure to get an idea of the risk.

victork
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victork

In case there’s more than 4 of us (counting me)reading this today…Does anyone have any thoughts on Fuel Systems Solutions (FSYS)? What cause the sudden run?

gene brown
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gene brown

According to the email I got from fool.com the stock in question is CPRT.

Tater
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Tater

Copart has been pushed for a while by MF but I have resisted the tempatation thus far. BWA is worth researching anyway. Tease This… Thanks for the sleuth work.

barndoor
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barndoor

BWA was indeed a MF Stock Advisor recommendation. (Feb 2003, up 2.2x since)

So far as I can see they last touted it in Aug 2006. In Nov 2007 it was ‘pricey’.

My 2cents: BWA is one of the few good auto related stocks (JCI is another) but the next few years may not be the era of such stocks. If cared to pay the gains (and if I had a better idea for placing the money) I would probably sell right now. Regardless, I’m not buying–but please show me tyhe error of my ways.

wpDiscuz