Ford Motor Company (F), General Motors Company (GM): Is Johnson Controls, Inc. (JCI) Destined for Greatness?

Page 2 of 2

Should Eastern weakness pass, Johnson Controls, Inc. (NYSE:JCI) would be well-positioned to capitalize on a largely untapped Chinese market. At present, Johnson is a dominant auto-parts supplier in that country, and its deals with Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) (among others) have installed Johnson parts in roughly 80% of all cars built worldwide. Both American automakers have substantial presences in China — General Motors Company (NYSE:GM) plans to build new plants worth $11 billion in that country by 2016, and Ford Motor Company (NYSE:F) already has five manufacturing facilities operating there. Fool contributor John Rosevear notes that a Chinese automaker might be interested in buying Johnson’s electronics segment, and Johnson could structure such a deal in a way that helps them gain even greater access to the Chinese market.

Johnson Controls, Inc. (NYSE:JCI) has already sold off its HomeLink vehicle remote control business for $700 million, which will help the company pad its coffers. There doesn’t appear to be much threat of Johnson depleting its cash, as trailing-12-month free cash flow remains in the $1 billion range, but refocusing on its core parts segments could help the company return its bottom line to a growth trajectory.

Putting the pieces together
Today, Johnson Controls has few of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy — or to stay away from a stock that’s going nowhere.

The article Is Johnson Controls Destined for Greatness? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.



Page 2 of 2