Why You Should Consider Toyota Stock In Current Market Turmoil?

  • A PE multiple of 8, and a dividend yield of 3%, makes Toyota stock a buy.
  • Toyota is the strongest Japanese car company, and a global leader.
  • Toyota is like its new Prius, not a world beater but a steady performer with a future.

Face it. In the short-term you’re not going to make a lot of money in this market. When people want to sell, they sell everything.

This has been true at Toyota Motor Corp (NYSE:TM) as anywhere else. The Japan based car maker's stock price is down over 13% in 2016, and is likely to fall further when New York opens for trading on February 11.

TM stock chart

Source: Toyota Motor stock chart by amigobulls.com

But even at the February 11 opening price, consider what you get. Toyota stock has a Price/Earnings multiple of a little more than 8, which is lower than that of Ford Motor (NYSE:F). It delivers a yield of 3.4%, based on a dividend it can cover nearly twice over with earnings. Operating cash flow remains strong.

Then there’s the Toyota brand. The company participates in all the fastest-growing niches of the car market, and it has sold over 2 million hybrid cars, including 1.7 million units in its Prius line, since their introduction at the start of the century.

No car company is firing on all cylinders, but Toyota tends to adjust to change better than most.

In January Toyota bought the rest of small car maker Daihatsu, which made its Scion cars, pointing that company’s production toward India, and in February it folded Scion into the main Toyota line into the main Toyota line. Toyota is in the best cash position of any Japanese automaker, while pouring more into research than the others, and it is thus poised to go after other brands, like Suzuki, that fit well with its operations. Toyota is looking into creating its own ride-sharing service, upgrading the electronics in its cars, and adapting to the idea that more families will own just one vehicle.

There are currently 27 analysts following Toyota stock, and none has a sell rating on the stock. Two-thirds of them have it as a buy and those numbers have changed little in the last three months.

Toyota stock is not a snazzy one, but in a bear market like this you don’t want snazzy. You want a steady performer that is trading at a low price. An earnings multiple of 8 with a yield of over 3% is a low price. The Toyota  stock could drop a little more, along with the rest of the market, before rising again.

But Toyota is now selling at the lowest prices it has seen since 2013. Accumulate it gradually, don’t punch the accelerator, and you should have as good an investment over the next decade as my family has had in its two Toyotas over the last one.

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Author's Disclosures & Disclaimers:
  • I do not hold any positions in the stocks mentioned in this post and don't intend to initiate a position in the next 72 hours
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
Amigobulls Disclosures & Disclaimers:

This post has been submitted by an independent external contributor. This author may or may not hold any positions in the stocks discussed. Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. Amigobulls has not verified the author’s positions in the stocks discussed, and does not provide any guarantees in this regard. The author may be paid by Amigobulls for this contribution, under the paid contributors program. However, Amigobulls does not guarantee the authenticity or accuracy of the information provided by the author in this post.

The author may not be a qualified investment advisor. The opinions stated in the post should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.

Amigobulls does not have any business relationship with any of the companies covered in this post. This post represents the views of the author/contributor and may not reflect the views of Amigobulls.

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