Auto sales are rocketing.
In November, the industry sold $1 billion worth of new vehicles a day, setting a record for that month.
And this flood tide of new vehicles will have more cutting-edge technology than ever before, creating a perfect profit storm of two exploding industries.
This is the most exciting time I've ever seen in the industry since I began tracking it 34 years ago.
And here's the thing: Google and Apple are excited, too. They'll make plenty of money on this trend, as you're about to see. But the "pure play" here is a much better investment...
Hi-Tech Now Comes Standard
I began following the auto industry back in March 1980 when I arrived in Detroit as a young analyst.
Back when I arrived, cars and trucks featured little beyond auto hardware and a few technical add-ons.
Their counterparts today are brimming with advanced sensors, semiconductors, micro-controllers, software, voice-activated GPS, and glitzy infotainment systems.
Yet when investors talk about exciting new technology trends, they often refer to sectors like Big Data, the mobile revolution, or cloud computing.
Few put the new cutting-edge auto industry on their short list of tech growth sectors to watch.
In this era of the "connected car," that's a huge mistake, and a great opportunity for you to win on this stock I've followed for years....
Older Cars on the Road Now Will Drive a New "Tech Refresh"
A wide range of exciting new tech features are helping the auto industry rack up new sales records.
With the average age of cars in the United States today at 11.4 years old, I expect new car sales to be strong for the next two to five years. Yes, in terms of reliability, many used cars and light-duty trucks can last well beyond 200,000 miles.
But from a technology standpoint, cars over a decade old are ancient, meaning we are poised for an auto-technology "refresh" cycle.
That's what the connected car is all about. Both domestic and foreign auto firms are integrating Bluetooth for wireless communications as well as Wi-Fi right into their dashboards.
This allows drivers and passengers to perform such tasks as sending and receiving text messages through voice-to-text services that aren't distracting.
Basically, carmakers realize that with the pervasive use of smartphones and tablet computers, consumers live in an always-on, high-tech world, and so automakers are building cars that fit into that lifestyle.
For instance, General Motors has already said it plans to equip almost all of its 2015 models with constant wireless broadband connections.
All of which helps explain why Silicon Valley leaders are targeting autos as their next big battleground.
Google Inc. (Nasdaq:GOOG) is forging alliances that will help make its Android mobile operating system, which dominates in smartphones, a key feature for automobiles.
Industry sources say Google is working with the German auto firm Audi to integrate Android right into the dashboard. The team wants to allow drivers and passengers to access navigation, apps, and music similar to the way they operate Android-powered smartphones.
Archrival Apple Inc. (Nasdaq:AAPL) has no intention of letting Google dominate the world of the connected car. Actually, it already has a bit of a head start.
Last June, Apple said it plans to integrate iPhones and other devices running its iOS operating system into auto dashboard control panels. So far, it has received the support of BMW, GM, Honda, and Mercedes Benz.
No doubt, Google and Apple are great tech leaders who stand to gain from the boom in cars sales. But neither is a pure play on advanced automotive technology.
That's why I think you should take a hard look at Delphi Automotive PLC (NYSE: DLPH).
A $1 Billion Backlog (and Counting)
The once-struggling firm is uniquely poised to benefit from the marriage of new vehicles and high-tech systems.
Strictly speaking, Delphi isn't simply focused on the connected car, per se. Instead, it takes a much more wide-ranging approach to supplying the auto industry with must-have technology.
Based in the Detroit suburb of Troy, Mich., Delphi offers a wide range of products used throughout the industry. For instance, it makes body control panels that feature remote keyless entry and alarms. It also makes digital displays designed to improve driver awareness.
And these days, it's getting a lot of media attention for its sophisticated safety devices. These include adaptive cruise control, lane departure warnings systems, and front and rear cameras integrated with collision avoidance radar.
Company officials say active safety is a major growth area for Delphi, adding that they already have a $1 billion backlog of orders in this segment.
And the Next 172% Gain Is Coming
Its focus on tech and new cash flow both represent a major turnaround for a company that filed for bankruptcy protection in 2005. That was a year after it suffered a stunning $4.75 billion loss as a company that made sparkplugs, steering wheels, and ball bearings.
Reorganized as a tech-focused auto supplier, Delphi went public in 2011 at $22 a share and was recently trading at around $60, for a post-IPO gain of 172%.
But the stock still has plenty of upside because of the huge role it plays in the global auto industry.
It sells to more than a dozen major brand names and boasts some 2 million parts numbers - Delphi ships more than 60 million parts around the world every day.
No wonder Delphi earns a stunning 37% return on stockholders equity, twice the industry average. It also has an operating margin and a return on assets of 10%.
And it offers a combination of growth and value. It trades at 18 times earnings, a slight discount from the S&P's ratio of 19.
Over the past three years, Delphi has grown earnings per share by 35%, meaning they could double in less than three years...
Delphi is much more than just a company reborn. It's a key catalyst for one of the greatest auto-tech booms ever. And it's racking up plenty of profits for its shareholders along the way.