Have you heard of Wabco Holdings? Odds are your answer is no. But they are a leader in the transportation industry and with all of the talk about tariffs, this stock has gotten caught up in it. As a result, now is a great time to consider adding this company to your portfolio and ride with them in earning profits for years to come.
Who Is Wabco Holdings?
Wabco Holdings (NYSE: WBC) is company that works to make commercial vehicles safer. They sell products that include high tech brakes, advanced safety gear, and blind spot monitoring systems for trucks and busses.
They also offer products that make these vehicles more fuel efficient as well. This includes air compressors, transmissions, and technology to improve the aerodynamics of tractor trailers.
The result is cheaper transportation costs and transportation that is a lot safer.
As of this writing, Wabco Holdings is a leader in this industry. They continuously are upping their game with new products and services. One way they do this is through acquisitions. In fact, in 2017 they purchased R.H. Sheppard to include that company’s automated steering system in their portfolio of products.
The majority of their business comes from sales in Europe and China, but the United States is a large part of their business as well.
When the company recently reported earnings, earnings per share beat expectations of $1.97 by $0.16. They also beat on the revenue side, with revenue of $1 billion. This was an increase over the previous year by 34%.
Why I Like Wabco Holdings
Wabco Holdings is a leader in their industry and they have a very strong leadership team. These factors alone are reasons to invest. The leadership is smart in making strategic acquisitions and not overpaying for them. As a result, the balance sheet is very strong.
As the economies around the world continue to grow, Wabco Holdings should continue to see a rise in revenues. And analysts agree. They estimate profits for 2018 will rise 12% and they expect annual earnings growth of 15% over the next 5 years.
What are the hurdles that Wabco needs to overcome? In the short term, there is some issue with tariffs. You can see this in the stock price of the company as it has pulled back a bit. But I feel tariffs are a short term issue and will be resolved quickly.
Long term, I don’t see the tariffs causing any major headaches for Wabco Holdings. The other issue many people point to is autonomous vehicles. The thinking is that these vehicles will be safer already and won’t need the products and services that Wabco sells.
This is not true at all. First, companies will still be looking to improve the aerodynamics of the vehicles to improve fuel efficiency. In addition, autonomous vehicles still require that there be a human in the vehicle to take over and ensure things are working smoothly.
Since a human is prone to error, the more safety features the vehicle has, the safer the vehicle is overall.
As a result, this too is not an issue for Wabco, nor other companies. All that is left is another company outsmarting them and becoming the leader in the industry. But I don’t see this happening either with the proven leadership Wabco has in place.
Overall, Wabco Holdings is a stock that needs to be considered for your portfolio. They are running on all cylinders right now and the recent drop in the stock price is an excellent time to get in on this industry leader.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.