Toyota's troubles bode well for Lear

Much has been written about Toyota’s big recall and the damage it will do to the company. The big winner as a result of this debacle is projected to be Ford, but there will be other winners, too.

Auto-parts-maker Lear (LEA) is poised to see sales increase as shoppers abandon Toyota in favor of Ford. This will be especially true if there is a big recall of the popular Prius hybrid.

A supposed brake problem may trigger the next domino to fall for Toyota.

As for Lear, it recently emerged from bankruptcy. The stock has been moving higher since, on the heels of strength at Ford (F). (I think these 10 stocks move higher, too)

On Friday, the company reported a strong profit, thanks to gains associated with its exiting bankruptcy. The company made $1.23 billion, compared with a $688 million loss a year ago.

Analysts were disappointed with sales guidance for 2010. LEA said it expected total sales in 2010 to range from $10.2 billion to $10.7 billion. The estimate was for sales of $10.87 billion.

Shares of LEA traded lower Friday as a result, but the decline may be temporary.

Make no mistake: What is happening at Toyota is a major crisis. Although auto companies routinely survive recalls, this time may be different.

Toyota has dragged its heels, being slow to respond to the acceleration problem. Now the same thing may be happening with the brake systems on Priuses. Trust has been broken, and it will take time for that trust to be rebuilt.

More importantly, all of this is taking place during a populist furor over executive misdeeds. To the extent Toyota is lumped in the same category, sales may drop precipitously.

Trust and safety are very important in the auto-buying decision. Consumers are likely to flock to other manufacturers because of this crisis at Toyota. Ford and its suppliers like Lear stand to benefit.

Estimates are for LEA to make $2.64 per share in 2010. That number could be too low if there is a run away from Toyota.

Despite a fairly rich valuation of 25 times forward earnings, I would look to buy shares of LEA on any weakness.

In addition to LEA, I like these 10 stocks in 2010.

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