Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Johnson Controls Inc (JCI), Delphi Automotive PLC (DLPH): An Auto Recovery Is Good for These Auto Parts Suppliers

Can’t beat the sound with this company

Harman International Industries Inc./DE/ (NYSE:HAR) sound systems are in more than 80% of the world’s luxury cars. Its brands include AKG, Harman Kardon, JBL, Infinity, Lexicon and Mark Levinson. The company also makes audio equipment used in recording studios and cinemas.

In the most recent quarter, earnings improved from $0.59 per share in the prior quarter to $0.79 per share. For fiscal 2013, earnings are now projected to be $3 per share compared to prior guidance of $2.70 to $2.90 per share. Revenues, however, decreased by 3.1% due to the slowdown in Europe and a 12% drop in European auto production.

Going forward, Harman International Industries Inc./DE/ (NYSE:HAR) continues to be a very shareholder-friendly company. The company increased the share repurchase authorization by $200 million. This is in addition to the $70 million left on its previous buyback. Harman also announced that it was doubling the quarterly dividend from $0.15 per share to $0.30. The dividend yield is now 2.3% and that makes the stock attractive for income investors. Harman International Industries Inc./DE/ (NYSE:HAR) can afford these moves with over $434 million in cash on the balance sheet and only $294 million in debt. The dividend payout ratio is still only 40%.

Growth is also likely to come from the company’s continued innovations. So far this fiscal year, Harman has filed 300 new patents and now has more than 4,600 patents in its portfolio. At the Geneva Auto Show, Harman and Ferrari showcased the use of Apple Inc. (NASDAQ:AAPL)’s Siri technology. Partnering with Apple is a great move for Harman and illustrates its strong presence in the audio space.

Foolish assessment

My favorite company in the space is Harman International. For one, I love their products. Two, I like the moves it is making in returning cash to shareholders and I think it’s positioned to grow as the top choice in the auto luxury market.

My second choice would be Johnson Controls Inc (NYSE:JCI). The stock has risen 35% in the past year and has a history of increasing the dividend. The capital expenditures Johnson Controls has made over the past two years should start to pay off for the company starting this year. Lastly, Delphi Automotive PLC (NYSE:DLPH) is a great company, but I would hold off on purchasing shares as they have doubled in the past year.

The article An Auto Recovery Is Good for These Auto Parts Suppliers originally appeared on and is written by Mark Yagalla.

Mark Yagalla has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.