NEW YORK (Dow Jones)–Shares of American Axle & Manufacturing Holdings Inc. (AXL) rose to their highest point since June 2008 on Wednesday, while Ford Motor Co. (F) hit another multi-year high, as the auto sector continued to garner the attention of those hoping for a rebound.
American Axle, which makes driveline and chassis systems for light vehicle manufacturers, rose as much as 7.3% in intraday trading to $11.06, the highest point in 21 months. The shares closed up 6% to $10.93, on higher than average volume. The shares have now gained 11% this month and soared 52% over the past three months.
The stock was among the strongest in the auto-supply sector Wednesday which was in general trading higher amid the broader market's gains.
Wall Street Strategies analyst David Silver upgraded American Axle to a buy rating earlier this month and thinks the stock is valuable up to $14 per share. He said at that time that while he'd like to see American Axle sign up more customers than General Motors Co., which makes up nearly 80% of American Axle's revenue, he expects production improvement at GM and the auto market in general to help American Axle sales.
To that end, GM finance chief Chris Liddell said Wednesday that GM has a reasonable chance of being profitable in 2010 and that it has a “remarkably strong” balance sheet.
Silver said those comments were a key driver of American Axle movements Wednesday.
“Any time GM says they are doing better, than American Axle gets a lift,” Silver said. “They are going to jump.”
Moody's Investors Service also earlier this month lifted torsion axle's credit rating, following a Standard & Poor's upgrade in February. Moody's said the company's significant restructuring actions taken last year facilitated stronger fourth-quarter results and positioned it for further improvement in results on a higher level of vehicle sales.
Also rising in the auto sector Wednesday and hitting its highest point since January 2005 was Ford, which rose 4.5% to $14.10, also on higher than average volume. Ford shares have hit multiple highs this month, gaining 20% so far.
Moody's Investors Service upgraded Ford in the wake of increased sales and a return to profitability Wednesday. The auto maker's debt levels remain high, Moody's pointed out, adding its competitive strengths and liquidity should provide enough cushion to cope with such risks as high debt, the fragile U.S. recovery, significant excess capacity in the global auto sector and a possible incentives battle.
Also ArvinMeritor Inc. (ARM) hit its own highest point since September 2008. The supplier has been getting away from light-vehicles and concentrating its parts production on the truck business. Its shares rose 3.1% to $12.83, though its volume was a bit lighter than a typical day.
Meanwhile, fellow truck parts maker Modine Manufacturing Co. (MOD) gained 2.4% to $11.05m while light-vehicle suppliers Johnson Controls Inc. (JCI) gained 1.6% to $32.20 and AutoLiv Inc. (ALV) rose 1.6% to $48.80.