NEW YORK ( TheStreet) -- With Ford ( F) performing strongly and the government trying to exit from GM, many investors are increasingly bullish on auto supplier stocks. As car unit sales continue to stabilize -- or pick up -- auto suppliers will undoubtedly reap rewards, and glean steady business going forward.

One piece of evidence of the investment community's increasingly bullish view towards auto supplier stocks can been seen in the recently rebalanced Hennessy Focus 30 Fund (HFTFX), which invests its assets in 30 mid-cap growth oriented companies, screening for undervalued stocks with above-average growth potential. The top three performers of the rebalanced fund have been Crocs ( CROX), TRW Automotive ( TRW) and Tenneco ( TEN). Two out of the top three are auto supplier stocks.

"Those companies were decimated when GM had to be taken over. So the ones that survived obviously had to cut to the bone and figure out a way to manage this," Hennessy co-portfolio manager Frank Ingarra explains. "I think the ones that we have or at least some other ones that are out there are the strong ones that have survived."

Other auto supplier stocks in the Focus 30 Fund include Autoliv ( ALV) and BorgWarner ( BWA). Automotive aftermarket parts retailer Advance Auto Parts ( AAP) is also in the fund.

Auto suppliers appear to be turning over a new leaf after being devastated during the height of the U.S. industry downturn. Read on to see how analysts have been viewing some of various auto suppliers as we come closer to their next quarterly earnings releases ...


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Autoliv, Ahead of the Earnings:

Comments From David Whiston, Morningstar: "Autoliv's leading position in the automotive safety equipment derby is safe, despite fierce competition and a weaker environment for auto sales.

"With more than one third of the market, Autoliv enjoys a large share in safety products such as airbags, seat belts, and safety electronics. This niche leads to more money because consumers demand safety equipment and automakers can charge higher prices for it. Autoliv has demonstrated technological leadership throughout its history: It introduced side-impact airbags, owns 7% of all automotive safety patents, and spends around 6% of sales on research and development. Despite this edge, we do not believe the company has an economic moat. Pricing pressures from automakers and exposure to the cyclical sales trend of the auto industry prevent the firm from building one.

"Still, expansion in the global auto market keeps demand high for Autoliv's products. The global average of safety content per vehicle is $260, but this amount varies considerably in emerging markets. For example, China's safety content per vehicle is just over $200 while India's is only about $70. Consequently, Autoliv can expand in its core business significantly, despite not having a moat."

Reports (Third Quarter): Oct. 26, before the market open

Consensus Estimate: Earnings per share of $1.23 on net sales of $1.64 billion. In the year-ago period, the company posted earnings per share of 36 cents on net sales of $1.326 billion


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BorgWarner, Ahead of the Earnings:

Recent Comments From Itay Michaeli, Citi: "Buy BWA.... We maintain a constructive long-term investment view of U.S. auto stocks for four core reasons:

1) Having undergone massive restructuring, auto companies today appear far more investable with lower break-evens, cleaner balance sheets and renewed pricing discipline setting the stage for profitable growth.

2) Though volume uncertainties exist amid mixed economic signals, our work suggests that a U.S. auto sales recovery could overshoot expectations once confidence improves or stimulus is enacted.

3) Our density survey reveals a more favorable outlook for Detroit 3 share.

4) Valuations remain attractive even if 2011 proves to be a flattish year. In selecting stocks, we seek out market share gainers while striking a balance between low valuations and margin upside potential using our internal margin-valuation matrix."

Reports (third quarter): Oct. 27, before the market open

Consensus Estimate: Earnings per share of 62 cents on net sales of $1.27 billion. During the same time last year, the company reported earnings per share of 15 cents on net sales of $1.028 billion.


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TRW Automotive, Ahead of the Earnings:

Recent Comments From Brett Hoselton, KeyBanc, in a Report: "We are maintaining our hold rating although we are increasingly favorable toward the company based upon the belief that:

"1) We are incrementally positive toward the outlook for Europe (57% of sales) given: a) the stabilization and improvement of the Euro; b) we have not seen any precipitous decline in European registrations; c)European production expectations have risen; d) summer shutdowns appear to be shortened particularly for the German automakers; and e) suppliers continue to benefit from a product mix shift from smaller A & B segment vehicles to higher contented C, D, & E vehicles.

"2) Given volumes continue to recover, we have increased confidence in TRW's ability to retain a significant amount of the operating margin improvement.

"3) Material free cash flow generation is likely to lead to continued reduction in net debt.

"4) While we are incrementally encouraged in the outlook for TRW, we remain somewhat cautious for the near-term outlook of light vehicle production in Europe and lack of company-specific catalysts to offset potential weakness."

Reports (Third Quarter): Nov. 3, before the market open

Consensus Estimate: Earnings of 73 cents a share on sales of $3.12 billion. During the same period last year, the company reported earnings of 68 cents a share on sales of $3.1 billion.


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Wabco (WBC), Ahead of the Earnings:

Recent Comments From Jeffrey Hammond, KeyBanc Capital Markets, in Report: "Following favorable anecdotal commentary from the IAA truck show in Hannover, Germany, we are reiterating our buy rating on WBC and increasing our price target to $49 (from $47). We continue to be surprised to the upside with regard to European truck production momentum, while emerging markets are proving more resilient in the near term. As a result, we are raising our 2011 forecast to $3.00 from $2.80, and continue to view WBC as a core holding despite its substantial outperformance year-to-date (WBC +63%; S&P Industrials +14%; S&P 500 +2.6%). We continue to appreciate the oligopoly structure of the commercial vehicle braking market as well as the secular growth drivers underpinning the WBC business -- i.e., increasing content per vehicle; emerging market exposure."

Reports (Third Quarter): Oct. 29, before market open

Consensus Estimate: Earnings of 50 cents a share on sales of $480.53 million. The company posted earnings of 19 cents a share on sales of $382 million the same time last year.


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ArvinMeritor (ARM), Ahead of the Earnings

Recent Comments From Ravi Shanker, Morgan Stanley, in Report: "ARM is heading into a CV (commercial vehicle) upcycle that is likely to be stronger than the light-vehicle recovery. We believe extensive restructuring in the downturn leaves ARM in a better position to capitalize than in previous cycles.

"What will drive the share price? Upward earnings revisions driven by improving heavy truck demand in N. America, Europe and Latin America. Where is our conviction? Pent-up demand and emissions legislation drive a CV rebound. Completed light vehicle divestiture and extensive restructuring should improve focus and profitability."

Reports (Fourth Quarter): Nov. 16, before the market open

Consensus Estimate: A penny loss on sales of $1.01 billion. During the same time last year, the company reported loss of 28 cents on sales of $984 million.


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Tenneco, Ahead of the Earnings:

Recent Comments From Richard Hilgert, Morningstar, in Report: "We are raising our credit rating for Tenneco to BB- from B+ to reflect our improved outlook for the company. Based on our new fair value estimate, our solvency score improved one decile, which was the primary rating driver. We now forecast returns on invested capital for 2010 of more than 12% vs. less than 9% in our previous model. We also forecast 2010 interest coverage of 4.3 times versus 3.5. We forecast leverage to fall to 2.2 times in 2010 vs. 3.7 previously, primarily because of our much higher estimate for earnings before interest, taxes, depreciation and amortization. The company improved its credit profile with the July issuance of $225 million of 7.75% senior unsecured notes due in 2018, used to call its $245 million of 10.25% senior secured notes due in 2013 at a slight premium. The extension of maturities and reduction in coupon served to modestly improve our cash flow cushion score."

"We will monitor Tenneco closely for potential further upgrades. As the firm continues to benefit from the strength in global auto production and its impressive cost reductions achieved in 2009, we expect strong growth in sales and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), which should result in lower leverage and better interest coverage."

Reports (Third Quarter): Oct. 28, before market open

Consensus Estimate: Earnings of 34 cents a share on revenue of $1.36 billion. The company posted earnings of 7 cents a share on revenue of $1.254 billion the same time last year.


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Johnson Controls (JCI), Ahead of the Earnings

Recent Comments From Brett Hoselton, KeyBanc, in a Report: "Following Johnson Controls's Strategic Review and 2011 Outlook Meeting, we are maintaining our hold rating although we are incrementally encouraged in multiple growth opportunities across its operating segments based on our belief that:

"1) Automotive experience sales growth of 5% is better than our expectation of 2% driven by higher but reasonable production assumptions and a stronger than expected 2011 to 2013 net new business backlog.

"2) Building efficiency sales growth of 8% to 10% was ahead of our conservative expectation of 6% and could potentially be supplemented with an acquisition.

"3) The short and long-term outlook for power solutions remains robust with sustainable 10%+ revenue growth being driven by market share gains, emerging markets penetration, and advanced battery technology.

"4) Free cash flow guidance and the increase in capital expenditures support potential revenue growth.

"5) Despite evident growth opportunities going forward, JCI's overall guidance for 2011 is likely already reflected in the stock price. Given guidance that was ahead of our expectations, we are raising our earnings estimates to $1.97 from $1.93 for 2010 and to $2.43 from $2.25 for 2011."

Reports (Fourth Quarter): Oct. 26, before the market open.

Consensus Estimate: Earnings per share of 57 cents on sales of $8.68 billion. During the same time last year, the company reported earnings per share of 52 cents on sales of $7.9 billion.

-- Written by Andrea Tse in New York.

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