This Day On The Street
Continue to site right-arrow
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Three automobile manufacturers start to look good as demand strengthens

Chris Lau, Kapitall: As aggregate global demand grows, automobile manufacturers start to look good.

The risk of deflation is not apparent in the automotive sector. Prices roses in March, while sales improved for many auto makers.

Prices rose for nearly all auto makers except for Nissan, according to Kelly Blue Book:

Screen Shot 2014-04-07 at 12.14.18 PM

Source: Kelly Blue Book

With Honda Motor Co. (HMC) down nearly 18% from its high in December 2013, its shares could rebound. Prices went up the most in the US, up 4.3% compared to March, 2013. Fellow Japanese manufacturer Toyota Motor (TM) saw vehicle prices improve by 2.3%. It’s worth noting that both manufacturers have rear cameras, which will meet the NHTSA’s (The National Highway Traffic Safety Administration) regulation for rear visibility cameras by May 2018.

Prices rose a respectable 1.7% for vehicles made by Ford Motor (F). The multi-year success in the turnaround of Ford is due strong leadership from its CEO, Alan Mulally. Sales rose 2.6% in March, thanks to the 4.1% rise in truck sales. Sales volume growth was highest for the Mustang, up 21%, followed by the Fusion, up 8.8%. Sales of the Focus dropped a disappointing 3.8%.

Ford shares appear fairly valued, but growth will depend on sales stabilizing in Europe. Ford is already cutting production in Russia, since sales there are weak. Sales declined by 21% in the region for the first two months in 2014. The more significant region for growth will be in Asia. Ford shares are valued at just 12 times forward earnings. Honda and Toyota trade at just 9 and 10 times forward earnings, respectively.

<p>Your browser does not support iframes.</p>

Bottom Line

The steady drop in automobile stocks is likely temporary. The stock market decline should not be associated to an economic slowdown. Employment in the U.S. is improving, and demand for consumer goods is strong. Auto demand will likely be sustained, meaning more upside ahead for Toyota, Honda, and Ford.

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!


DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs