Seeking Alpha: Federal Mogul Could Still Have More Under The Hood

If you bought Federal-Mogul (FDML) shares in March or April of this year, then you certainly deserve to bask in the success of taking a major gamble that paid off handsomely. Shares of this heavily indebted auto parts company have nearly tripled from the April lows as a recovery in the auto parts business, the ongoing support of Carl Icahn, and a successful rights offering have all provided a little extra breathing room.

As crazy as its sounds, there could still be room for this stock to run. Both sides of the business are growing ahead of vehicle production rates, and a shift towards more emerging market sales and a focus on efficiency-improving/emissions-reducing products fits with what vehicle makers want these days. In addition, the company is already in the midst of transitioning production to lower cost regions, while further debt reduction should reduce both the company's interest burden and its cost of capital. Even with the huge move in the stock, a continuation into the high teens or even low $20s is not out of the realm of possibility, suggesting 20% to 40% potential even from here.

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Federal Mogul Could Still Have More Under The Hood