Gentex (GNTX, news, msgs) and other auto parts suppliers are transforming the rearview mirror from a low-tech assemblage of plastic and glass to a sophisticated electronic module that automakers use to introduce safety and communications features to their vehicles.
Gentex's specialty is a rearview mirror that uses electricity to automatically dim the headlight glare from trailing vehicles. It also has mirror devices that display the temperature, hold microphones that permit hands-free cell phone conversations, open your garage door and turn on your home's lights.
The Zeeland, Mich., company is a leader in the drive to incorporate cameras into automotive mirrors. It has a system that links a rear-mounted camera to a video monitor embedded in the rearview mirror that gives drivers a better view of what's behind them as they back up. The company's cameras can distinguish between red and white lights, and between streetlamps and the lights of oncoming vehicles.
The 35-year-old company's focus on innovation was cited by Wells Fargo on Oct. 16 as it raised its rating on Gentex to "outperform" from "market perform." Analyst Richard M. Kwas said the stock was attractive "given earnings growth prospects." Kwas raised his earnings estimates for 2009 and 2010, saying he expects production to rise as the company's SmartBeam and rear camera mirror systems push into new markets.
Gentex appears on a monthly list of stocks created with MSN Money's StockScouter tool, which since 2001 has helped investors assess individual stocks' likelihood of outperforming the broad market.
Investment research firm Gradient Analytics uses StockScouter to create daily and monthly stock lists. MSN Money columnist Jon Markman collaborated with the company to devise strategies for putting the tool to work.
One of Markman's strategies involves investing an equal amount of money in each of the stocks in the computer-generated portfolio at the start of the month, selling them at the end of the month, then beginning the process again the next month. For investors who prefer to handle fewer stocks, Markman recommends using the strategy with the top 10 stocks on the list. An investor who followed Markman's 10-stock strategy since it was launched would have realized a gain of 455% through Oct. 31, according to Gradient Analytics, and had an annual average return of 22.9%. Over the same period, the Standard & Poor's 500 Index ($INX) was down 14.4%.
The chart on the next page represents the benchmark StockScouter portfolio for November.
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Coach rolls out China strategy
Coach (COH, news, msgs) is also on the November list. The designer and marketer of handbags and fashion accessories is touting early success with its lower-priced Poppy collection, introduced in July to stem the slide in same-store sales and lure younger shoppers.The New York company is also bullish about prospects in mainland China, where it's set to open its first store next spring, in Shanghai. Coach already has stores in Hong Kong and Macau.
Coach hopes its aggressive expansion in China will replicate the success it's had in Japan, which accounts for about 40% of the global handbag market. Coach sees the Chinese market for luxury handbags and accessories more than doubling, to $2.5 billion, by 2013.
"We're squarely focused on the abundant growth opportunities available to us as we begin to emerge from this downturn," CEO Lew Frankfort told investors and analysts last month during a conference call to analyze fiscal-first-quarter financial results.
Video: Coach's mixed bagThe downturn knocked demand for apparel and accessories back to 2005 levels, said Standard & Poor's Equity Research analyst Marie Driscoll in an Oct. 23 note to clients. She also said Coach should benefit from the resulting "shakeout of extraneous brands."
Jefferies on Oct. 30 raised its rating on Coach to "buy" from "hold," citing valuation and saying that "sales trends are about to accelerate" as consumers return to the malls and department stores restock depleted inventories. The investment bank raised its target price on the stock by $2 to $40. "We believe shares deserve a premium given stronger global-growth prospects, industry-leading returns and a strong management team," Jefferies said in its research report.
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