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Take Your Position, Goodyear & BorgWarner

With so many changes roiling the auto industry, how should you trade Goodyear and BorgWarner ahead of earnings.

Borg Warner

Over the past 3 months shares of Borg-Warner have surged 33% as investors bet that the auto parts maker would profit from the woes of rival Lear, which filed for bankruptcy.

However, last quarter Borg-Warner posted a loss of $7 million citing the sharp decline in vehicle production.

How should you trade?

Borg Warner is my favorite play in the space, says Wall Street Strategies analyst David Silver. However it’s worth noting the stock hits resistance around $36 and I expect to see a pullback.

Symbol
Price
 
Change
%Change
BWA
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Goodyear Tire

Over the past 3 months shares of Goodyear have surged 37% as the company assured motorists that their tires were, indeed, top notch. Quality came into question during a Nascar race last season when some Goodyear tires disintegrated unexpectedly.

Financially speaking, it’s unclear whether the company is in the same condition as its tires. Last quarter Goodyear reported a loss of $333 million largely due to a sharp decline in sales and rising materials costs.

Symbol
Price
 
Change
%Change
GT
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Trader disclosure: On July 28th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (AAPL), (AA), (BAC), (FXI); Seygem Asset Management Is Short (VALE); Seygem Asset Management Is Short (PBR); Finerman's Firm Owns (MSFT), (PM), (SVU); Finerman's Firm And Finerman Own (BAC) Preferred Shares, Finerman Owns (BAC); Finerman's Firm Owns (WFMI) Puts; Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (USO), (BWA), (IYR), (IJR), (MDY), (SPY), (IWM); Terranova Owns (MSFT), (MCD), (AMZN)

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