Is PACCAR a Buy at These Levels?

PACCAR Inc. (NDAQ: PCAR) may be well off of its 52-week highs, but many analysts believe its worth a second look. The auto parts manufacturer has been benefiting from rising prices, increasing market share, and strong growth abroad, but continues to struggle with a downturn in the United States. So, is this a company for investors to consider right now?

PACCAR has seen its average prices rise about 5 percent in North America and Europe due to the increased emission control. The firm's PACCAR Parts and PACCAR Financial Services continue to grow strongly with 2008 industry sales in Europe expected to be at a record 350,000 to 360,000 units. Meanwhile, the firm said it would buyback some 5.62 million shares.

However, slowing sales in its trucking division during the first half of the year has hurt its prospects. The increase in diesel prices along with the depressing housing market and lower auto production has led to lowered sales expectations of 150,000 to 165,000 trucks for 2008. The company also faces increased competition from Navistar and Volve in the United States.

In the end, a turnaround in the U.S. auto industry could help PACCAR quickly recover as it has already built up strong growth abroad. However, the company is currently rated a hold by many right now as its foreign strength is simply offsetting its domestic weakness. As a result, investors may want to wait for a catalyst before investing.

PACCAR Inc operates through two segments: design, manufacture and distribution of light-, medium- and heavy-duty trucks and related aftermarket distribution of parts, and finance and leasing services provided to customers and dealers. The Company’s finance and leasing activities are principally related to Company products and associated equipment. Other manufactured products include industrial winches.

Shares of PACCAR Inc. are trading $0.06, or 0.14%, lower at $42.19 per share.