A favorite among investors in auto stocks, Johnson Controls (JCI) provides a host of equipment to automobiles — including batteries of all types. And while the bulk of its business still comes from old-school lead acid batteries, its Power Solutions division is increasingly getting into the lithium battery game for both hybrids and electric vehicles.
Right now, in fact, Daimler (DDAIF) is using Johnson Controls as a supplier for its hybrid S-class Mercedes sedan. And you can bet that as the automotive industry evolves, JCI will be there to provide batteries to the biggest and best vehicles on the market.
Exposure to both conventional and EV sales means that obviously Johnson Controls will be prone to secular pressures in the auto industry, and even a growing market for electric vehicles could be offset by declines in the overall business of making and selling cars going forward.
But considering that auto sales at home and abroad keep moving higher and that 2014 is forecast to be the best year for U.S. auto sales since 2006, right now that broad exposure is actually a good thing for JCI.
Johnson Controls stock is up 40% year-to-date in 2013.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.