This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Hydrogen Under the Hood at Toyota

NEW YORK (TheStreet) -- The world's leading automaker Toyota (TM - Get Report) is expecting record annual profits due partly to sales and partly to weakness in the yen. Its fuel-efficient hybrid cars continue to grow their already massive sales. In the meantime, while some of the leading vehicle manufacturers have been trying to capitalize on the increasing demand for electric vehicles like those created by Tesla Motors (TSLA), Toyota on the other hand has been increasing its focus on its hydrogen-powered cars.

On Tuesday, the company reported more than fivefold year-over-year increase in quarterly profits to $5.2 billion. For the full fiscal year, Toyota is targeting net income of $18.8 billion, which would show around 100% increase from net income of $9.5 billion in the previous fiscal year. This would come from sale of 9.98 million vehicles in 2013, more than any other automaker in the world.

Moreover, Toyota plans to retain the crown as the world's best-selling automaker by selling 10.32 million cars in 2014. Some of this increase in sales can be attributed to the popularity of its fuel-efficient hybrid vehicles. They have given a boost to sales in regions like Europe where competitors have struggled.

Despite the positive outlook, Toyota's shares dropped by more than 5% due to the strength of the yen and an expected drop in sales in North America by 30,000 units in the current fiscal year. As a result, Toyota's shares closed at $112.75 on Monday and are trading just 12.9 times their trailing earnings and just 0.85 times their trailing sales.

I believe that is cheap for a blue chip stock with industry-leading sales volume.

Back in 2003, President George W. Bush promised $1.2 billion for research and development for hydrogen-powered cars. Ten years later, due to a lack of infrastructure, the hydrogen cars are still a distant dream. Toyota, on the other hand, is optimistic. Some European nations and Japan have been developing the infrastructure for hydrogen cars. Toyota's executives believe that the U.S. will follow suit.

The infrastructure investment will start with California, Tesla's home ground. Some of the success of the electric vehicle maker is due to the support from the state and its residents. The state is now turning toward hydrogen-powered cars by spending $200 million to build around 100 hydrogen fueling stations by 2024.

Toyota is hoping for considerable improvement in the sale of its hydrogen vehicles in California in the coming years. Meanwhile, Toyota will also increase its lobbying efforts to push other states toward the development of infrastructure for hydrogen cars.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
TM $141.21 0.00%
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%
TSLA $218.42 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs