) --


( ARM) is still riding the tide of investor confidence in the stock two days after the company forecast positive free cash flow for the third straight quarter in a row.

ArvinMeritor stock has jumped 6.1% to $11 in morning trading, while on Wednesday the commercial vehicle-parts supplier spiked 7.5% at a 14-month high of $10.22.

At an analyst meeting on Tuesday, ArvinMeritor said it expected a third straight quarter of positive free cash flow, indicating the company is emerging from a three-year financial slump, according to the

Wall Street Journal.

This is good news -- although Robert W. Baird analyst David Leiker said it was unknown how investors would respond to the 10% margin expectation, since some analysts may have thought the company could achieve 15%, according the paper.

ArvinMeritor is still going through the process of major transformations, including divestitures and cost-cutting measures.

In its fourth-quarter fiscal 2009 report, the company said it recently divested several light vehicle businesses as it transforms itself into a commercial vehicle and industrial company. That the company has for the most part exited the light vehicles segment is a "huge positive," for ArvinMeritor, according to Wall Street Strategies analyst David Silver, who was cited by the paper.

For the fiscal year 2009, the company reached cost savings of $195 million in its core businesses through workforce and temporary salary reductions, eliminating training programs and selectively reducing capital spending, for example. It also shut down plants, including its Carrollton, Ky. assembly, machining and casting operation and the Tilbury, Ontario, Canada braking systems facility.

ArvinMeritor reported a loss of $49 million or 68 cents per diluted share from continuing operations in the fourth quarter, versus a loss of $160 million or $2.22 per diluted share in the prior year.

A few of ArvinMeritor's peers have also been trading in positive territory.


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-- Reported by Andrea Tse in New York

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