This Day On The Street
Continue to site
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

GM, Toyota Are Strong Buys, Says S&P Analyst

Detroit (TheStreet) -- It hasn't been much of a first quarter for the auto industry, but 2014's woes could be could be setting the stage for a strong 2015.

On Wednesday, S&P Capital IQ analyst Efraim Levy raised his rating on Toyota (TM - Get Report) to strong buy from buy, following Toyota's announcement that it will repurchase up to 1.9% of its stock float. Levy also has a strong buy on GM (GM - Get Report) and a buy on Ford (F)

"A general thesis is looking past 2014 towards growth in 2015," Levy said, in an interview on Thursday. His buy recommendations come as forecasters are predicting an increase in March auto sales, following three consecutive months of flat or down sales, which were widely but not universally attributed to weather. J.D. Power is forecasting a March sales increase of 6%.

So far this year, GM shares are down about 15%, Toyota shares are down about 8% and Ford shares are down about 1%. In mid-morning trading Thursday, all three were showing modest gains.

Levy said his Toyota upgrade reflects an upside related to "a strong balance sheet" at "a strong company that has closed the book on their major recall issue with a settlement with the Department of Justice (and) the fact that they are putting money where their mouth is to repurchase shares.

"It reflects the undervalued nature of the stock," he said. "They have a good dividend plus appreciation potential. It's hard to find much downside." For the year, Toyota sales are down 9%. 

As for GM, shares have fallen about 8% since Levy upgraded to a strong buy on March 8. GM announced on Feb. 7 that it would recall about 800,000 cars; on Feb.24, about 600,000 cars were added to the recall. Levy said he is looking past the recall's impact. "A lot of work is being done at GM to improve profitability," he said. "Launch costs will pressure margins, but they should reap benefits from new launches and from European restructuring in 2015.

Must Read: Toyota Says Auto Sales Leap in March After Three Weak Months

"You have to drive the slushy highway of 2014 to get to clearer sailing in 2015," he said.

Levy also has a buy on Ford. His report issued March 22 said he expects profit to shrink in 2014 "due to expenses stemming from a record number of new products, increased competitive pressures and costs at Chinese joint ventures where Ford is sharply increasing its capacity."

Additionally, he wrote, Ford faces production downtime as it retools for the 2015 F-150, significant losses in Europe, pressure in South America, and investment costs.

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
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GM $31.00 1.50%
TM $101.61 0.34%
AAPL $92.15 -1.20%
FB $118.99 1.00%
GOOG $708.14 0.96%


Chart of I:DJI
DOW 17,680.71 +20.00 0.11%
S&P 500 2,049.93 -0.70 -0.03%
NASDAQ 4,709.31 -7.7840 -0.17%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs