Genuine Parts Co. $35 – New York symbol GPC

GENUINE PARTS CO. $35 (New York symbol GPC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 161.8 million; Market cap: $5.7 billion; WSSF Rating: Average) distributes automotive replacement parts to over 4,800 independent outlets in North America. It also operates over 1,100 auto parts stores under the NAPA banner. As well, the company distributes industrial parts, office furniture and electrical equipment.

Genuine Parts has increased its dividend for 52 consecutive years. The current rate of $1.56 a share yields 4.5%.

The stock has moved down from $50 in November, 2007. That’s partly due to its exposure to the slowing automotive industry, which accounts for half of its revenue and earnings. However, a drop in new car sales is good news for Genuine Parts. As more drivers choose to maintain their current vehicles instead of buying new ones, demand for replacement parts is likely to rise.

In the third quarter of 2008, Genuine Parts earned $131.0 million, up 1.9% from $128.6 million a year earlier. Earnings per share rose 6.6%, to $0.81 from $0.76, on fewer shares outstanding. Revenue grew 3.0%, to $2.9 billion from $2.8 billion.

Genuine Parts’ strong balance sheet will also help it overcome this downturn. Long-term debt of $250 million is just 4% of its market cap. It also holds cash of $124.4 million or $0.77 a share.

The company should earn $3.10 a share in 2008, and the stock trades at just 11.3 times that figure.

Genuine Parts is a buy.