Tenneco Inc (TEN), Polaris Industries Inc. (PII), Tata Motors Limited (ADR) (TTM): Three Investment Vehicles to Consider

Page 1 of 2

The automotive industry is recovering. If not for the economic woes in Europe that are hampering demand there, there may well be a global upturn in light vehicle demand occurring. Along those lines, sales of recreational vehicles are also growing at a decent clip. The investment community has noticed, sending shares of those durable products up sharply in many instances. Is there further upside in these lesser-known holdings?

This assessment ought to help readers to decide:

Tenneco Inc (NYSE:TEN) – Will the stock’s uphill climb continue?

Tenneco Inc (NYSE:TEN)

Shares of emissions and ride control products supplier, Tenneco Inc (NYSE:TEN) have been trading at or near their 52-week peak of late. The company is uniquely positioned to benefit from the tightening of emissions regulations in the auto market, a space also occupied by diversified manufacturing giant Corning Incorporated (NYSE:GLW). Tenneco primarily serves the light, specialty, and commercial market, while Corning is present in the heavy-duty end market. As for its Ride Performance (ride control) division, Tenneco Inc (NYSE:TEN) is a producer of shocks and struts with a worldwide manufacturing base.

Sales in the “Clean Air” emissions unit are on the rise, with OEM demand picking up substantially in the Asia-Pacific region, marked by rapid growth in China and India. In fact, light vehicle production rates may be gaining steam. The commercial manufacturing market, meanwhile, might well persist at a low level, and inventories are being de-stocked. Thus, Tenneco Inc (NYSE:TEN)’s sales comparisons to that end market might well be limited. Finally, the aftermarket environment is relatively weak in North America and Europe, and demand has probably been relatively weak there, too.

Overall, Tenneco Inc (NYSE:TEN)’s revenues are on track to begin to trend positively, and earnings should continue to advance due to cost reductions.

Polaris Industries Inc. (NYSE:PII) – An in vogue recreational vehicle manufacturer

Off-road vehicle producer, Polaris Industries Inc. (NYSE:PII), is on pace for outstanding top- and bottom-line gains this year. Share earnings could well rise to between $5.05 and $5.20, from $4.40 last year. Sales growth should approximate 12% to 15%, thanks to new motorcycle, commercial vehicle and off-road models, as well as the likelihood of reduced North American inventories. Operating expenses are apt to remain flat as a percentage of sales, allowing for profit advances.

The shares are more tied to the broader recreational product market than automotive, including companies like Winnebago and Thor Industries. They hold investment appeal for the near and/or long term.

Tata Motors Limited (ADR) (NYSE:TTM) –  The Indian automaker may hold long-term value

Indian auto manufacturer Tata Motors Limited (ADR) (NYSE:TTM) experienced a significant decline in volume sales of its passenger autos in the most recent quarter. Heightened competition is pressuring demand for its offerings and it has ceded market share. As a result, share earnings declined substantially in the latest quarter.

The earnings weakness is little to do with the performance of the company’s Jaguar/Land Rover unit. That business’ volumes rose 18% in the period. This is likely where management will focus its product development efforts.

In fact, the company is planning to boost its capital expenditure budget out to 2014, adding capacity in China for instance. I see this aspect of Tata Motors Limited (ADR) (NYSE:TTM) as a major catalyst for long-term profit upside. Accordingly, the shares, dependent somewhat on the Indian economy, offer 3- to 5-year capital appreciation potential.

Page 1 of 2