Strong Buy: Genuine Parts - TheStreet

(Updated with analyst's opinion and stock price movement)

NEW YORK (

TheStreet

) -- Auto replacement parts company

Genuine Parts

(GPC) - Get Report

jumps on higher earnings, an optimistic 2010 outlook and an increased cash dividend.

Genuine Parts said, in its earnings reports, that it began to experience the effects of the economic slowdown in the final quarter of 2008, but observed some early signs of improving market conditions in the second part of 2009. Genuine Parts says this signals stronger performance in 2010.

Genuine Parts reported its fourth quarter earnings just a day after declaring an increase of about 3% in its regular quarterly cash dividend for 2010, or an annual rate of $1.64 per share compared with the previous dividend of $1.60 per share. The company says it has paid a cash dividend every year since going public in 1948, and that 2010 marks the 54th consecutive year of increased dividends paid to shareholders.

Genuine Parts reported net income of $99.2 million in the fourth quarter, or 62 cents a share, up from $87.8 million, or 55 cents a share, a year ago. Sales decreased 2% to $2.47 billion. The company watched its automotive sales go up 6% in the fourth quarter, offset by an 11% decline in industrial group sales and 12% reduction at its electrical group.

Wall Street had forecast earnings of 51 cents on revenue of $2.4 billion.

S&P maintains a strong buy opinion on shares of Genuine Parts and has upped its target price by $2 to $49 in light of the earnings release. S&P also raises its 2010 earnings estimate by 8 cents to $2.67 a share.

"The balance sheet is strong in our view and supportive of share buybacks and acquisitions," analyst Efraim Levy noted.

Genuine Parts stock has jumped 5.8% to $40.40.

Related stocks are also generally trading trader higher today.

Lithia Motors

(LAD) - Get Report

stock is up 3.1% at $5.90.

On Feb. 3 Lithia Motors reported that, based on preliminary unaudited results, 2009 adjusted fourth quarter earnings per share from continuing operations are within a range of zero to 2 cents. This compares with a loss of 16 cents a share for Lithia Motors a year ago.On a related note,

Gentex

(GNTX) - Get Report

stock has added 1.6% at $19.10.

Gentex has said that based on CSM Worldwide's end-of-December light vehicle production forecast for the first quarter of 2010, it currently expects net sales in the first quarter of 2010 to increase by 80% to 90% compared with the first quarter of 2009.

However, Gentex warns that the global automotive market is still a bit unstable, and that it continues to feel uncertainty moving forward.

Auto parts supplier

LKQ Corporation

(LKQX)

, for its part, is unchanged. LKQX is slated to report its fourth-quarter and full-year 2009 financial results on February 25. The company is expected to host a conference call for investors on the same day at 10 a.m.

-- Reported by Andrea Tse in New York

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