BorgWarner (BWA): Rev Up Your Portfolio With this Powerful Stock

BorgWarner (BWA) is a leader in auto parts and equipment sounds a bit sleepy on the surface. However, things get a bit more interesting when I point out that their massive investments in EV are starting to pay off as was clear in their latest earnings beat which points to an emerging turnaround. 

History shows that turnarounds are some of the best investments because you have a combination of depressed valuations along with soaring earnings prospects that help send shares vastly higher as the turnaround unfolds. 

On top of that you have the catalyst of the future lowering of rates by the Fed that benefits all industries that rely heavily on borrowing for business activity. Auto certainly fits in that and should see a nice pickup in growth as car loans become less expensive in time. 

The Zen Score shows that the average company in their industry only puts up a 32. BWA is a good spot higher with a score of 53 that says it is a more fundamentally sound company than most in the group. 

The Buy issued by the POWR Ratings check of 118 different fundamental factors also points to it be healthier than the normal company. This increases the odds of future earnings beats.  

On that front it is good to note that their most recent 18% earnings beat was a nice change of pace after a string of 4 straight disappointments that led to lower and lower earnings projections.

This has some leading analysts pounding the table on BWA’s upside in the year ahead. This includes the Buy from Noah Kaye @ Oppenheimer (top 13%). Even better is the $43 target from Alexander Potter of Piper Sandler (top 3%). 

To be honest, that seems far too low at only 9X next year’s earnings projections. Yes, auto typically has lower PE’s and PEGs…but 12X seems a bit more on target.

So, I like the chance for shares to get back into the mid $50 as it was back in 2021…then hopefully beyond to new heights. 

It is hard to beat the upside potential of turnaround stocks as you get to buy them at a steep discount, then enjoy incredible gains as the rest of the market gets the hint and starts bidding up shares.

On top of that we have the catalyst of lower rates on the way that foster more growth in the years ahead. 

Adding these 2 elements together points to these shares having 100%+ upside potential by the end of 2025…and even more in the years ahead. 

What To Do Next?

BorgWarner (BWA) is just one of the 9 stellar stocks found in my Zen Investor portfolio.

To learn more about my exclusive 4 step process to find more 100%+ stock winners…and to get your hands on the current top 9 recommendations…then all you need to do is click the link below. 

Discover the Zen Investor portfolio >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)

Editor of the Zen Investor

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