Delphi Can't Go Far Without GM

Auto-parts suppliers may still look like better investments than their Big Three customers these days, but that doesn't necessarily mean it's time to buy all of them.

Delphi (DPH Quote) is one example. Although the company has demonstrated tremendous progress on restructuring relatively high-cost operations and diversifying its sales base, its fate is still heavily tied to General Motors (GM Quote), which accounts for roughly 60% of Delphi's total sales. And as GM wrestles with market-share losses and historically high levels of inventory, the outlook for GM's production, and consequently Delphi's GM sales, is not encouraging.

With the stock down close to 6% so far this year, slightly worse than the 5% decline in the Dow Jones Auto Parts supplier index, many of the company's potential near-term challenges are already reflected in the stock price. On a valuation basis, however, the stock is not very tempting. ...