Chicago Auto Show: The Future Is Now?

At the currently running Chicago Auto Show, all types have turned out to get a glimpse of what will grace our boulevards and freeways in the next few years. Clearly one does not need to be a hardcore gear-head to take a strong interest these days; after all, as American taxpayers we ourselves own a large chunk of GM and Chrysler. Their newest designs are on our dime.

This year’s concept cars at the Chicago Auto Show (the second of 11 auto shows held globally this year) seem to reflect this sentiment. Largely foregoing extravagant outer designs — and clearly dumping the gas-guzzling behemoth concept cars from auto shows a few years ago — this year’s auto show features many cars with hybrid engine technology and some with straight-up electric engines. Even GM’s Cadillac XTS Platinum concept is a hybrid V6 at this year’s auto show.

Elsewhere, new auto show models with 40+ miles per gallon are not uncommon, and many designs have taken a decidedly European (read: short-body) turn. In fact, both the new Ford (F) Focus and Fiesta have been developed by Ford of Europe. Hmm…suddenly, Chrysler merging with Fiat sounds a little less crazy…

OK, so what does the Chicago Auto Show mean for investors looking to take advantage of a burgeoning new auto market? Well, if what we’re seeing at this auto show in terms of advanced fuel efficiency does indeed point to the future of the industry, then one of the most promising new releases this year remains GM’s Chevy Volt.

GM Chairman/CEO Ed Whitacre has been quoted as saying the Chevy Volt will create an entire new ecosystem of battery developers, charging stations and electric motor suppliers (“The Truth About Cars“). But only a successful launch of the Chevy Volt late this year will begin to back up such lofty projections.

Besides, GM won’t be publicly traded again until this spring or summer, the earliest. And with GM’s other problems — chiefly the many billions of dollars GM owes to the U.S. Treasury, the UAW and the Canadian government — can one little electric car really turn around GM’s fortunes overnight? Probably not.

So while GM’s issues get sorted out — and speaking of GM’s issues, it’s hard to believe I’ve gone this long without even mentioning Toyota’s (TM) and Honda’s (HMC) recent spates of auto recalls — a good place to turn for investors would be select auto suppliers.

Even though the auto supplier sub-industry has been hit as hard if not harder overall than the major automakers during the sector’s deep downturn, and contains dozens of well-known companies currently awash in pink slips and over-the-counter trading, there is at least one bright spot to consider.

Wisconsin-based Johnson Controls (JCI) is a Zacks #1 Rank stock. Importantly, Johnson Controls’ businesses are diversified beyond the automotive industry, but 42% of Johnson Controls’ total 2009 revenue came from its Automotive Experience segment. An important part of this is Johnson Controls’ hybrid battery business, and Johnson Controls’ recent Delphi global battery acquisition is another big step to grow market share.

Following record-high earnings in its fiscal first quarter, Johnson Controls raised guidance for fiscal 2010 by 16%. 15 analysts covering Johnson Controls stock took notice and raised estimates for Johnson Controls’ current fiscal year; 11 of these raised fiscal second quarter estimates for Johnson Controls.

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