Opening Segment 1 Title: 'Cramer's Game Plan   For Next Week' .  .  .  .  . Featured Stock(s): Foster Wheeler (FWLT*) Wal-Mart (WMT) Deere (DE) Hewlett-Packard (HPQ) See Opening Segment 2, below...

        
JJC:    I think it's finally ready to be bought... I think Visteon Corp. (VC), which used to stand for Victim's club, could now be for Victor's club. Understand me, VC is a pure turn around play so we know they are inheritantly dangerous. This company is restructuring itself. That's the catalyst. That's why I'm recommending an auto parts play in an environment where I don't want to go near the auto parts, other than the FORD Preferred (F-PA). If you remember that Lear Corp. (LEA) turnaround which continues, it started in 2006, I think this could be the next Leer. VC will go up for one terribly unsexy reason, a reason I typically don't like to recommend stocks, but for this group it works. That is head count reduction. They're slashing costs and that boosts the numbers. But the street is fighting them tooth and nail.

Last week, VC reported a spectacular quarter, much better than expected with earnings before interest and taxes a positive 51 million dollars, the street was looking for a 40 million dollar loss in earnings before interest and taxes. The street was looking for a house of pain but they got a house of pleasure. Still, it's a small number considering VC 2.86 billion in sales for the quarter, but the numbers are improving. The margins, the company's profitability is improving. Gross margins for the first quarter actually increased, I didn't expect this, to 7.1%, from 4.2% last year. You know what that tells me? It tells me that the turn around is working. It makes me a buyer.

Now of all the bulge bracket major firms that cover VC, they've all got in neutral or a hold, don't buy, and not one of them changed their ratings after this unexpected quarter. These are all fighting it. They won't come around until it's too late. They are gonna stay bearish until its bullish and that's great for you because when they are finally forced to come around the good numbers from VC, they'll take the stock even higher and let you make the great trade. The expectations from the street are so low it just creates a fantastic opportunity for you to buy VC and for VC to pull another upside surprise. VC is helping them with lowball guidance. They are saying we don't know if we can make it, perfect. They're saying it's going to be break even cash flow for this year. That's so low even the animals don't believe in it. VC is perfect...under promise, over deliver. The analysts have been singed, they've been scalded, they've been toasted, had third degree burns on 101% of their bodies. They don't want to go positive. But we haven't been burned, we're tanned, like Les Moonves, CEO of CBS Corporation (CBS). But we have the edge and we are saying VC is a buy, buy, buy. 

This company has made great strides in cutting costs. It sold 23 unprofitable plants. That had the added advantage of removing more than 18,000 expensive union employee contracts. I love unions, but on this show I'm wearing my share holder hat and I'll take higher share prices over unions on any day of the week. For example, back in Sept 2005, VC sold it's automotive components holding business back to Ford, allowing the company to rid itself of continued losses. They also got Ford to absorb some of their healthcare liability. That's huge because the union healthcare liability really weighs down on anything auto. The largest cost in making an automobile is healthcare. VC is focused on building strong leadership positions and niche auto positions: electronics, climate sensors, interior parts. VC today is a smaller, more efficient company with a more realistic cost structure that management believes will make VC more profitable by 20 tan, that's close.

VC has also been diversifying its sales, it no longer just relies on Ford. In 2004 Ford was 70% of VC sales and by 2007 it was below 40%. Management expects Ford to decline to 25% of sales by 2010. Even though we believe in Ford, and prefer the preferred that was issued in 2006. Sales to GM and Chrysler were only 4%, so actually VC could benefit from increased sales to the other members of the not so big anymore three. The company has substantial contracts with Hyundai, that's 15% of sales, Nissan Murano, 11% of sales and it's already established a presence with the rest of the world...Asia 5% of revenue growth in the first quarter. This is really set. Of course this is a speculative stock and that means risk. VC main risk is debt, I would not recommend this stock on a non-speculative basis because it has 2.8 billion dollars of debt and only 1.8 billion in cash. It's got 550 million in debt coming due in 2010, so they're going to have to do a refinancing. 1.5 billion coming due in 2013, 450 million in 2014. This all comes after the company should be turning a profit but it's a worry, again, speculations wouldn't be speculations if there weren't things wrong with them.

One last point in VC's favor. Michael Johnson, veteran of Johnson controls, which is a very well run company was named chairman and CEO in 2005. He has been spearheading the restructure and he's part of the reason to believe. We like him almost as much as we like Michael Johnson at Herbalife Ltd. (HLF). A couple of Johnson's turnaround companies.