June 16, 2008 - Johnson Controls (NYSE:JCI) – Not a pure play, but will be a leader in the PHEV industry. Earlier this year, it won the Ford contract through its JV, Saft business. Johnson Controls will be providing a lithium-ion battery pack for Ford’s demo fleet. The JC-Saft JV is working with Ford on the DOE $10 million grant to advance development in plug-in technologies.

The stock closed on Friday at $33.28, about 25% off its 52-week high, and only about 13% off its 52-week low. The stock is trading at a P/E (ttm) of 14.46 and about 0.52x P/S (ttm). At current levels, the stock looks like a great value relative to its growth prospects both in the PHEV market and building efficiency markets.

Based on a forecast of $39 billion for 2008 (13% Y/Y growth), and boosting our forecasted P/E multiples to 18x 2008 earnings based on the strong growth prospects, and higher margin business in the building efficiency and PHEV segments, we derive a target price for the stock at about $45, a 35% increase from current levels. This is still only about 0.69x P/S (2008).