A Good Year For Goodyear? (GT)

Shares of The Goodyear Tire & Rubber Company GT are moving 1.5% higher on strong volume today, on the back of some takeover chatter. The Akron-based tire maker has been the subject of takeover rumors before, from Michelin, the French-based tire maker, as well as other auto-parts makers to complement their brands. David Tepper, of Appaloosa Management, has a 4% stake in the company, that was announced last week. Tepper filed a 13D, which is a passive stake, not an activist one. This means that Tepper believes there is value in the name, but is not going to do anything about with management. Tepper sees the values of Goodyear's financial strength, and perhaps others do as well. The company has roughly a 1.8 current ration, and it's EBITDA to interest coverage is greater than 5, meaning there's plenty of money coming in to pay off the company's debt. Wall Street expects the tire company to report 2011 earnings of approximately $1.38 per share, which would put the company trading at less than 10 times 2011 earnings. According to a research report from KeyBanc, the company has traded as high as 15 times earnings, and as low as 9 times earnings. This suggests there isn't much more room on the downside, and could be significant room on the upside. Disclosure: no position in names mentioned