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Autoliv (ALV) reported third quarter earnings per share of either $1.48 (non-GAAP) or $1.12 (GAAP). (GAAP is generally accepted accounting principles.)  That consensus was $1.09 a share on Wall Street.

Revenue of $2.04 billion was in line with expectations and up 0.5% year over year.

For the full 2020 year the company said it expects a 14.5% drop in revenue–versus Wall Street projections for a 15.05% decline.

While those results may seem lackluster, they represent a huge improvement for the maker of auto safety systems. For the quarter, organic sales growth was up 0.4%. That compares to a drop of 48% in the second quarter. The most positive news came from China where organic sales grew by 10.4% in the quarter. That outstripped the 8.7% gain in light vehicle production in China for the quarter. In the Americas organic sales growth of 1.2% came against a drop in light vehicle production of 4.3%.

The Chinese story is especially encouraging with light vehicle sales showing year over year growth every month for the last six months. (Although forecasts are for a 5% year over year drop in sales in the fourth quarter as comparisons get tougher.) China represented 21% of sales for Autoliv in the third quarter.

Adjusted operating margin grew by 110 basis points to 10.1%. Free cash flow of $276 million in the quarter went to reducing net debt by $265 million from the prior quarter to $1.57 billion.

The stock climbed 0.88% today, October 23, to close at $84.94. The average Wall Street target price is $83.29.

I think the signs of the recovery in China’s auto market are real. Europe too looked like it was moving toward a recovery but the latest wave of coronavirus cases in that region puts economic trends there in doubt.

With all the signs in Autoliv’s earnings report of the company building toward a revenue recovery on the strength of sales to Chinese auto makers, I think there are better plays on the global auto recovery.

My three favorites are European chip makers Infineon Technologies (IFNNY), up 13.62% in the last month, and NXP Semiconductors (NXPI), up 10% in the last month, and Japanese electric motor maker Nidec (NJDCY), up 1.23% in the last month. My favorite of these is Nidec because of its increasing penetration of the Chinese market as a supplier of drive systems to the makers of electric vehicles.

All three stocks are members of my online portfolios.

Infineon is up 39.3% since I added it to my Jubak Picks Portfolio on May 6, 2019. NXP is up 35.8% since it joined my Volatility Portfolio on June 2, 2020. Nidec is ahead 99.9% since I added it to my 50 Stocks Portfolio on July 11, 2017.

Full disclosure: I own shares of all three companies in my personal portfolios.