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Letter to the Editor

This article originally appeared in the March 2011 Issue of INSIGHT

Positively Blooming

Our industry-related stock chart this month is full of really beautiful things - like a bunch of spring flowers! Only ONE stock price showed negative growth since January. Car insurer Allstate posted a per share stock price of $30.54 this month, about five percent below its New Year’s $32.22 figure. All others are in the plus column. The Dow stands at a very nice 12227, and the rest of our indices are showing steady improvement, too.

Two of our U.S. national auto sellers achieved the biggest jump in per share stock prices on Wall Street this month. Both AutoNation, with a stock price of $33.25 and the Penske Automotive Group, at $16.92 are up nearly 17 percent YTD. CarMax , at $35.66 per share, rose a hair below 12 percent YTD, and Sonic Automotive, at an even $14.00 per share, inched up a bit over four percent YTD.

Recently, paint and glass maker PPG Industries forecast first-quarter earnings well above Wall Street's expectations, sending its shares up nearly five percent to an all-time high. What a nice recovery for PPG. The company had taken quite a beating at the Dow during the economic recession, mostly because of the steep drop in building construction. According to a press release, PPG CEO Charles Bunch believes that trend has slowly begun to turn around, based on cost cutting measures and a slow but continuing recovery in global industrial activity levels.

For the first quarter, PPG expects earnings of $1.30 to $1.35 per share. That is far above the $1.12 per share analysts expect. Bunch said he expects the factors that helped the first quarter to continue in the second quarter. The company may need to offset higher supply costs by implementing “nontraditional pricing actions,” according to Bunch.

PPG’s per share stock price briefly rose $4.45, almost five percent, to $95.04, an all-time high for the Pittsburgh-based manufacturer.

LKQ Corporation may be planning to grow even bigger this year. The aftermarket and recycled parts seller just signed on for a $1 billion credit facility.

Speaking of parts, there may be a shortage of some parts for Some Japanese autos, due to the devastation experienced in Japan from earthquakes and the subsequent tsunami. We all feel deep sadness for victims and survivors, and wish our ally nation a safe and speedy recovery.

-Charles Baker-

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