Bayerische Motoren Werke AG (BMW.DE)

General Motors (GM-N) or BMW (BMW-GR)? Thinks the sector is going to be solid. There is going to be an upturn in China this year, and they are the biggest buyers in the world. Both companies appeal to the Chinese. He likes the sector.

A unique story. There were 18 million car sales in North America last year, and a lot of purchasing got pushed forward. With Quantitative Easing, he thinks the same thing will happen in Europe. Their car sales are below the 2007 level. Trading at 8X earnings. They meet all the CO2 requirements in Europe and have a great quality hybrid/electric car business. Dividend yield of 4.02%.

Has a great franchise in China, but people feel China is slowing down, but even if they stabilize, they’ll do very well. European car sales have been much lower than in North America. Their peak was in 2007, and they haven’t reached that yet, where North American car sales have. There is pent-up demand for cars in Europe. Not an expensive stock. Trading at 7X earnings with a 4.3% dividend yield.

His favourite automobile company. (Actually prefers auto parts over OEMs, because their margins can expand further and they are more geared to energy efficiency.) BMW has high margins and is a well-run company. Has exposure to the “luxury only” area. Doing extraordinarily well in China. Their move into the electric vehicle with the I series is under-appreciated.