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Auto Makers Are Out Of Gas

The 30 lowest rated companies in the ETFI Global Auto Makers Index and short ETF proposal lost an astonishing 63.9% in market value over the past year, compared to a loss of 37% each for the S&P 500 SPDR (SPY) and the Consumer Discretionary Sector SPDR (XLY). The index includes companies with market caps over $150M U.S. Dollars which are active in the following business segments: auto/truck makers, motor sports/recreation – e.g. Polaris (PII), motorcycles – e.g. Harley Davidson (HOG), and recreational vehicles – e.g. Winnebago (WGO).

This article is a reprint of my 5 August 2008 RealMoney column.

With consumers under duress, it is likely wise to avoid consumer-discretionary stocks, especially those in companies that sell goods that cost thousands of dollars. But few fortunes are made by following conventional logic, and often investors must look for unconventional opportunities that may be unfairly priced. I think Polaris Industries (PII) may be one such opportunity.

Polaris make all-terrain vehicles (ATVs), snowmobiles and motorcycles and markets them — together with related replacement parts, garments and acces