Toyota - invest in a winner

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Kiplinger's Stock Watch - April 24, 2007
..Toyota cars have fewer defects than any other make, and Toyota has several other advantages that make the company a compelling investment.
To start, rising gasoline prices are likely, and Toyota is a leader in hybrid technology. It opened its first U.S. hybrid car plant in Kentucky last year. And while Ford and GM are closing plants, Toyota plants here and abroad continue to operate at full capacity, points out a Citigroup research report. Toyota employs as many workers as GM, it just does so much more efficiently. In fact, the last time Toyota had a big layoff was the 1950s.
Toyota is a financial juggernaut. It has been the world's most profitable automaker for years. When earnings slip a bit, the headlines aren't about layoffs and restructuring, they're about the company sinking more yen into research and development or quality control... =========GM vs Toyota vs Ford, 10-year chart: http://tinyurl.com/36zcgl
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GM's and Ford's earnings have not slipped a bit. They nose-dived.
I think the bottom line is that Toyota and Honda think a lot more about the long-term growth of the company compared to Ford, GM and Diamler Chrysler.
I do see more long-term thinking at the Michigan-3: I am impressed with the cars all three have introduced in the US in the last 2 years. And Chrysler is making great improvements to its minivan.
Jeff
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the
We had to come up against them in the specialty chemicals business, and they were formidable. Apparently the Japanese have (or had) strong support from the financial sector to allow them to spend time and money in development and market control. (I suspect the Japanese worker is the one who makes the sacrifices in terms of taxes,etc, and the industries stand to gain from this strong position)
Never think, however, that they are not innovators nor that their technical sector is not equal to ours. Our children seem to be suffering from laziness and underachievement, while theirs still work hard to learn and achieve.
This is not a short term challenge for the USA. We have a problem, and it is us.
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Absolutely true.
Unfortunately, Wall Street is too often driven by next quarter's results. The results 5 years from now is more important.

It is very sad when you see American kids who gifts are wasted. I see it every day in NYC, where there is not nearly a strong enough culture of learning. This same culture is in every American city. Fortunately, there people who are able to give these kids a real chance, like those who sponsor I Have a Dream programs and Harlem RBI.
Sadly, some inner city youth are more likely to spend time in jail than they are to go to college. What a waste.

We also have a solution: It is us.
As they say, if you are not part of the solution, you are part of the problem.
Jeff
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Absolutely, Jeff. I saw an interview with Bill Bradley this morning, and his attitude is so very positive. He said, basically, that we dont need 'leadership'. We need to organize ourselves strongly and TELL our elected servants what to do. We certainly cant expect much from them, historically.
The American people are good and strong. But we have to get our of our LazyBoy chairs and get our business in order.
If we cannot or WILL NOT enforce our borders and immigration rules, what sort of worthless people have we sent to Washington. We need a Million Gringo march, or something.
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Yes, certainly. My great-great-grandparents came from Germany and Switzerland. When they came here, they came with a great work ethic. My great grandfather worked in the mines in Scranton. My grandfather that coal around on the back of a Ford Model A pickup truck in the winter and ice around in the summer.
We certainly should march all these Gringos. Strait to the schools and the libraries, with all the people in the US. What this country needs is brainpower. Our inner-city kids, our country kids, our suburban kids, whether they are citizens or not are our main resources. We need to work together to make this a better country.
Jeff
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Jeff wrote:

But in the end that is just another lame excuse. Unless a company is selling it's own stock then it really doesn't need to care about the short term stock price. Companies which grow and prosper over time are always rewarded with a strong stock price over time. It is the idiot short term managers fault if they listen to the noise from analysts!
John
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Not entirely accurate...
According to JD Powers the leader in initial quality is Porsche, followed by Lexus, Hyundai, and then Toyota.
For long term dependability JD Power ranked Toyota fourth behind Lexus, Mercury, Buick, and Cadillac.
In either case the difference between Toyota and "average" is trivial and probably not statistically meaningful (I can't see how 0.3 problems per car can be significant). One study recently concluded that Ford and Toyota quality were in statistical dead heat.See : http://www.detnews.com/apps/pbcs.dll/article?AID=/20070418/AUTO01/704180425

If it employees as many workers as GM, yet, at least until now, sold fewer cars, how can they do "so much more efficiently?" The statement seems wrong, although the sentiment might be right.
And although Toyota might be doing well in the US and Europe, in its home market, it sales are down more than 10%. In contrast, outside of it's home market (the US), Ford is doing well, but it sales are down 13% in the US. So when the press talks about Ford, they always emphasize the US problems. Why is it when the press talks about Toyota they skip over it's home market problems and emphasize the US results?

So why then has Toyota had major quality problems in recent years? In 2005 Toyota recalled more cars than GM or Ford. Why does the US press rarely mention this?
Here are some other references regarding Toyota quality:
http://tinyurl.com/32yxcq http://www.iht.com/articles/2006/08/04/business/recall.php http://www.iht.com/articles/2006/09/14/business/quality.php http://www.autoweek.com/apps/pbcs.dll/article?AID=/20060501/FREE/60501002/1024/LATESTNEWS

For an example of how irrelevant this is, see http://tinyurl.com/2ec6jn
Personally, I'd recommend against investing in any automobile company. But I suppose if I wanted to invest in the segment, I'd go for the undervalued company - and I can't see how that is Toyota. The long term trend has for Toyota to track lower than the major averages. With the recent run-up in the price, it has greatly out performed the averages. I would expect the price to drop back to the historical trends in the longer run, making an investment in Toyota risky. This has nothing to do with the quality of the cars, so no matter how good the cars are, I don't think the stick is a good bet. But that is just my opinion.
Ed
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What's their long-term survey, now? Three years, isn't it? My "new" car is a 2001.

Whatever difference there is seems to make a huge difference to the manufacturer. It's probably not precisely an apples-to-apples comparison and it's a little old but this article on warranty casts an interesting light on vehicle reliability...
http://www.warrantyweek.com/archive/ww20060620.html
This essentially cuts the gross profit on each GM and Ford by 1.3% relative to Toyota and Honda.

http://www.autoweek.com/apps/pbcs.dll/article?AID=/20060501/FREE/60501002/1024/LATESTNEWS
--
Posted via a free Usenet account from http://www.teranews.com


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The difference to that the only thing Ford knows about auto quality is how it looks parked on Dearborn Street. And the only thing morons on Dearborn Street knows about quality is how it looks parked on top of an apple salesman.

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DH wrote:

=The last stock investment advice I got on a Toyota oriented group was at the Google IPO it said "but don't buy their over priced stock" when it was around $100. I bought Toyota (TM) at $78 based on the reason in the first post and it has done just fine. Only wish I'd been able to invest more. The growth going forward is in Asia. GM has essentially donated much of their technological expertise to the Chinese in joint venture partnerships to gain market share where now the Chinese are gaining on GM in their domestic market using skills learned from them. Toyota refused to partner and divulge secrets yet their sales in the region are growing. Seems the biggest domestic drag on auto sales is the maxed out mortgage market. I'm still looking for the next great thing. The key is to be ahead of the curve when it comes to trends. BTW the other post that said Lexus is number two in quality not Toyota - Lexus is a Toyota brand.
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Based on future potential, I think it was over valued at $100. That just makes it wildly over valued at $135. The problems with stocks is that people treat it like a casino game. Sooner or later the big boys will cash out, and the ones who aren't quick enough will be left holding the bag. I'll assume you are a long term investor - do you think relative to the market averages, Toyota stock will do better or worse in the next ten years? I'd bet on it doing worse than the market average. This has nothing to do with the quality of the cars or the greatness of Toyota technology. It has everything to do with the competitive nature of the automotive market place. The significant areas for future growth are India and China. Neither of these countries is going to be like the US and hand an industry over to the Japanese. They'll do the same thing to Toyota that the Japanese did to Ford 75 years ago - learn from them and then kick them out. Automobile sales in Toyota's home market are down significantly. Toyota sold over 10% fewer car in Japan last year than the year before. They were able to maintain production at the Japanese factories by shipping more cars overseas (they actually increased the percentage of imported Toyotas sold in the US so far this year). What happens if the US goes into recession? What are the chances that US manufacturers will start competing in the low end market again? The economics of hybrids is not particularly attractive. What happens when the WOW factor wears off?

Good luck. Timing can be everything. You have over a 70% profit. What are you holding out for?

But at a slower rate than GM. And Toyota does have Chinese partners. See: http://www.chinadaily.com.cn/en/doc/2003-07/26/content_249476.htm http://english.people.com.cn/200510/25/eng20051025_216529.html http://www.cnbc.com/id/18213852

How about 5 years of ever increasing sales. Just how many new cars do people need? I've done my part, 6 new vehicles and 3 used ones, in the last ten years. Unfortunately my SO is not doing her's, only 3 in ten years (she had to replace her Chrysler van, and got cars for the kids). The people in the Toyota newsgroup all seem to believe that most Toyota owners keep their cars for 10 years or more, so the replacement market for Toyotas is heavily dependent on converts from other brands. It seems to me many of the easy targets are already driving Toyotas or Hondas. Where are the buyers going to come from to keep sales going up? What do you think Toyota share of the US market will be in 10 years?

Yes, definitely. Being ahead of the trend when it comes to automotive stocks is getting out. And since Toyota's stock appears to be the most over valued auto stock it would seem to me that selling it is staying ahead of the curve. I can't imagine that the upside is another 70% increase in the next 2 years.

And Mercury is a Ford Brand, and Buick and Cadillac are GM brands. All modern cars are very close in quality. The differences in most of these quality surveys has more to do with perception than reality and the results are so close that the top brands are likely in a statistical dead heat. Since Toyota quality is largely based on perception, it can change rapidly. A few more years of record recalls and Toyota the myth of Toyota quality will be dispelled.
The fun thing about stock investing is that both of us will likely be right if we pick the right time period. No stock continues upwards forever, so at some point, the price of Toyota stock will go down. At this point I can declare myself right. Eventually it will go back up, if for no other reason, long term inflation, at this point you can tell me "I told you so." Enjoy.
Ed
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George Orwell, 4/30/2007,1:45:07 PM, wrote:

I am excited to report my TM stock has increased 50% January 2005. I only wish I had bought more but I can't complain about my CVX stock that has increased the same amount since I bought it three days afterwards.
--
"Underlying most arguments against the free market is a lack of belief
in freedom itself." ~ Milton Friedman
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What do you actually get when you purchase Toyota Stock? I assume you are actually buying American Depositary Receipts for Toyota Motor Stock. What bank holds the actual shares? Do they keep a portion of the dividends or sales price to cover their expenses?
Personally I'd be nervous holding onto a stock trading at 2 to 2.5 times it historical average.
Ed
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C. E. White, 5/1/2007,7:12:46 AM, wrote:

I buy my stuff through mu online securities dealer, Etrade. The only thing I have to show that I own any stock is my monthly statements and the sales form. You don't get actual certificates anymore unless you buy directly from the company.
In most cases you are right about overpriced stocks but the rules are changing and yield/dividend or PE ratio is not always the primary focus when purchasing stock. Besides, Toyota Motor Company certainly has the capital and long-term focus to back up its current price. http://finance.yahoo.com/q?s=tm
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Look at IBM circa 1978....As soon as you see a graph going up at an 45% angle and hear executives talking about growing at that rate into the future - RUN AWAY! Toyota has a fair amount of room to grow - assuming they can take down at least one of the US big three , over come the Chinese distrust of Japanese companies, keep the Koreans at bay, hope that the Chinese don't take over the lower priced market, .......you get the picture. Again, RUN AWAY. Sometimes the Bulls win, sometimes the Bears win, the Pigs always get slaughtered.
Ed
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I see what you mean. Those big companies like SprawlMart, ExxonMobil and CocaCola never do well. ;-)
Actually, Toyota is making a ton of money in North America, and is growing in countries like India and China. Hey, even Ford is able to make money overseas. As more and more areas are being industrialized, more and more people want to buy cars. Toyota has a lot of room to grow.
Jeff
Jeff

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C. E. White wrote:

=IBM looks good to me again. They had the largest number of patents issued last year, sold their PC division, have bulked up on profitable acquisitions, are reasonably priced, and their margins are good.
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I am not sure selling their PC division was a good idea.
But, overall, I think IBM is a good buy, for the reasons you cite, but the fact that they still make a bunch of money from mainframes and they do a ton of consulting for iCommerce (the 'i', in this case, stands for "IBM", not "internet").
Jeff
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About 6 years ago, I open an account with an internet bank, Lighthouse Bank. The bank was owned by Brookline Bank in MA. The bank was a part mutually owned and part owned by shareholders. As a depositer, I had the option to buy shares at $10 each. When I got my three hundred shares, I got an actual stock certificate. I had a retail account at Fidelity, so I took the stock certificate there. I later sold the shares and made like 60% on the deal. I just wish I had more money back then so I could have bought more shares.
That was the only actual stock certificates I actually owned.
You can buy stock certificates for companies like Disney and Hersheys. They are meant mostly as gifts for kids. It costs only $143. Most of that is for the frame, transfer fee and such. THe stock is worth $55.
On a recent episode of Sound Money, there was some rich guy who is barely out of the fortune 500. That rich guy has the weird had of getting actual stock certificates rather than trading electronically. http://marketplacemoney.publicradio.org/display/web/2007/03/30/day_in_the_work_life_wallet_protector /

I disagree. There are many things to look at like the business model, company leaders, history, and future trends in the industry as well as the numbers.
Jeff
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