01/22/2015 7:00 am EST


Richard Moroney

Editor, Dow Theory Forecasts

Our favorite idea for 2015 is a leading maker of specialty heating and cooling systems; the company is mainly benefiting from robust demand for its climate-controlled car seats, explains small-cap specialist Richard Moroney in Upside.

Gentherm (THRM) has outstanding operating momentum. September-quarter earnings per share doubled to $0.48, while revenue increased 20%.

The company is also seeing strong demand for heated steering wheels. Strong production volumes and healthy sales of new vehicles, particularly luxury models, should help drive sales and earnings.

Shares have rallied 48% this year yet trade at a reasonable 19 times expected earnings for 2015. The consensus projects Gentherm will grow per-share earnings 96% in 2014, followed by 16% growth next year.

Consensus profit estimates for both years have risen over the past month, partly reflecting management's tendency to deliver positive surprises. Gentherm has topped the consensus in five straight quarters, by an average of 46%.

The stock earns an Overall score of 95, versus averages of 62 for consumer-discretionary stocks and 61 for auto-equipment suppliers. Gentherm, capable of climbing 20% in the year ahead, is a Best Buy.

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