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Tickers in this Article: F, GM, TM, OSK, ARM, TEN, WBC, ABG
With a sluggish economy, partly due to an increase in fuel costs, it is not surprising that companies in the automotive sector are seeing large declines. Companies such as Ford (NYSE:F), and General Motors (NYSE:GM) are seeing sales drop, as fewer of their flagship trucks are purchased because consumers on the whole are looking for more fuel efficient vehicles. Foreign car manufacturers such as Toyota (NYSE:TM) don't rely so heavily on truck and SUV sales, and are thus doing a bit better. Toyota for example earned over $10 per share over the past year, compared to the per share losses posted by GM and Ford of $74.28 and $1.14 respectively.

But what about the guys that provide the parts to these manufacturers? Aside from Asbury Automotive Group (NYSE:ABG), this edition of our bears list, is full of companies that engage in the design, manufacturing, and marketing of specialty parts used in the manufacturing of automobiles. It goes without saying, that these companies will be hurt by lower demand. Let's take a closer look at these, and see if we can find one that has branched outside of the consumer vehicle market, and try to find some opportunity.

Company One Month Loss* Market Capitalization
Oshkosh
(NYSE:OSK)
47.8% $1 billion
ArvinMentor
(NYSE:ARM)
23.1%
$900 million
Tenneco
(NYSE:TEN)
13.4%
$633 million
WABCO Holdings
(NYSE:WBC)
16.0%
$3 billion
Asbury Automotive
(NYSE:ABG)
15.8% $377 million
*Data as of market close July 18, 2008

Oshkosh Builds Strength Through Diversity
Oshkosh (NYSE:OSK) has a variety of segments, which is important in an industry that is showing weakness. This diversity may help the company bring in earnings when others may not be able to. For example, Oshkosh's Defense segment manufactures severe-duty, tactical trucks for the department of defense. As conflicts continue overseas, automotive products such as these are ever important. Oshkosh also has a Fire and Emergency segment, which manufactures custom emergency vehicles such as pumpers, ladder trucks, bomb-quad and hazardous materials control vehicles. Oshkosh has many segments, but these two in particular are shielded from a slowing economy. (Learn to use defense stocks to protect your portfolio from global unrest in Terrorism's Effects On Wall Street.)

Financially, Oshkosh is in relatively good shape when compared to its competitors. With earnings per share of almost $4, compared to the industry average of 32 cents, owners of Oshkosh are getting more for their money. Oshkosh has come down off of its 52-week high of over $63, to close on Friday just over $18; partly because of a decline in the overall industry. The company is now looking quite the value pick because it kept earnings up as the stock price plummeted. As of current prices, Oshkosh has a P/E of under 5.

Shrinking Estimates
It is important to note, however, that current quarter results will be released at the beginning of August. Although estimates are still positive, they have been decreasing over the past month. Just three months ago, it was estimated that Oshkosh's quarterly earnings would come in at $1.50 per share, which has since been reduced to the current estimate of just 92 cents. Over the past year, the company has surprised three-out-of-four quarters, so it would be nice to see it do this again. (For more on analyst expectations read Analyst Forecasts Spell Disaster For Some Stocks.)

I would like to see if Oshkosh can impress analysts one more time, and then would be ready to call a bottom in this beaten down stock. it has had some good news recently, such as the successful armor testing of its Joint Light Tactical Vehicle family, and the Department of Defense should be deciding on its selection of JLTV prototypes. Good news and surprising earnings could be just the momentum this stock needs to bring it back up.

Will the price of gas come down? Will manufacturers begin to create cheaper and more efficient vehicles, so that they can survive if neither happens? Be sure to join me (aytonmm) in the FREE Stock Picking Community to share your thoughts and see what other investors are saying.

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