Thursday, February 2, 2017

A current AIM holding: Autoliv (ALV) by Matt Ogren “Looking to Move Ahead”


Autoliv Inc. (ALV, $116.06): “Hands Free”
By: Matthew Ogren, AIM Student at Marquette University


Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

 Summary
Autoliv Inc. (NYSE:ALV) is a world leader in automotive safety systems. The company designs and produces safety systems for all the major manufacturers within the automotive industry. Products include traditional automotive necessities such as airbags and seatbelts, along with relatively new, electronic-based systems. These systems include radar, night vision and camera vision systems.
• Autoliv Inc. had a strong showing at the 2017 Consumer Electronics Show (CES) in Las Vegas, Nevada earlier this January.
• On January 3, 2017, Autoliv and Volvo officially signed the final agreement for their previously announced joint venture.
• ALV recently joined the international research program ADAS & ME with its 29 other partners.
• During the month of November ALV declared a dividend of 58 cents a share for quarter one of 2017.
• Autoliv Inc. along with Key Safety Systems Inc. may have the opportunity to present embroiled Japanese based Takata Corporation with takeover bids.

Key points: Autoliv showcased a few of their newest innovations at the CES earlier this month. The new innovations unveiled included the company’s newest camera, radar and multiple other modules. Autoliv describes their newest cameras as “an extra pair of eyes” in the car. The company’s new family of radars, the 77GHz series, are considered the highest distance resolution radars available today. These newest innovations, along with others, are steps forward into the inevitable reality of self-driving vehicles.    

Autoliv and Volvo announced that they would be entering a joint venture in early September. When the two companies finalized this arrangement on January 3 they gave more details on the endeavor. The joint venture will be owned 50/50 and will be named Zenuity. The new company plans to start operations before the end of 2017. Assuming they stick to their pre-established timeline, Zenuity should be selling their first product by 2019.

ADAS & ME is a program that focuses on drivers of cars interacting with Advanced Driver Assistance Systems and autonomous vehicles. The major reasons for this program, and Autoliv’s involvement in it, were addressed by Camilla Apoy, ALV’s Research project leader. She stated, “To increase road safety and save even more lives, we need to understand how the driver interacts with highly automated driving solutions. This project is also about learning how driver collaboration with the technology can be facilitated.” 

What has the stock done lately?
Autoliv has had strong performance lately. The company had a rough October and early November, before bottoming out at a price of $94.29 on Nov. 9th. Although since that date, the stock price has seen a major resurgence. As of market close on January 25, 2017; the price per a share had exceeded $116.   

Past Year Performance: Over the course of the last year Autoliv’s stock price has fluctuated from the mid-$90s to the mid-$120s. Despite all the movement both up and down, the company has maintained its value from a year ago. However, Autoliv Inc. was not added to the AIM International Equity Fund until early September of 2016. The shares were purchased at a price of $103.43 meaning they have generated a ~12% return since their addition.

Source: FactSet

My Takeaway
Autoliv has been a strong, well-respected company within their industry for years. They continue to earn and uphold their reputation day in and day out. The evidence can be seen in their unwavering commitment to auto safety and the development of auto technology. Whether they are successful in a takeover of Takata Corporation or not, Autoliv will continue to be a leader within the automotive community. Through their active safety branch of operations and advancements such as autonomous diving, Autoliv is a firm that is set on reaching new heights. Look for ALV’s stock price to reflect this, and for it to rise back into the $120s and beyond.  

    Source: FactSet






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