Schaeffer's Trading Floor Blog

Weekly Contrarian: Diagnosing the Apathy Toward Toyota Motor Corporation (ADR) (TM)

TM had a relatively stellar July, yet analysts pay no mind

by 8/8/2013 10:21 AM
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At risk of drawing "hoots and hollers from Detroit loyalists," this Fortune column claims Toyota Motor Corporation (ADR) (NYSE:TM) -- not Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), or Chrysler -- emerged as the big sales winner for July.

Although TM lost a bit of market share and had the advantage of a relatively cheap yen, "More Americans bought cars and trucks with the Toyota emblem on the hood than with the Chevrolet bowtie," the author notes. What's more, TM sold more light vehicles than Ford last month "despite having far fewer dealers and selling far fewer trucks," and despite announcing that it would pay $1.6 billion to "vehicle owners who suffered financial losses as a result of sudden, unintended acceleration between 2009 and 2010." Plus, the Prius accounted for nearly half the 300,000 hybrids purchased by Americans so far this year.

While "we should all root for the home teams and the city of Detroit's speedy and sensible exit from bankruptcy, we should keep in mind what they are up against," the article concludes. Toyota -- now the second-largest car company in America -- is on its way toward making more than 10 million vehicles globally this year, which would mark a record for any auto manufacturer.

Contrarian Perspective

Technically speaking, TM has rallied more than 57% over the past year, ushered higher atop its 10-week moving average. In fact, the stock touched a six-year high of $134.94 earlier this month, and was last seen in the $128.33 neighborhood.

Nevertheless, Wall Street is generally apathetic when it comes to Toyota Motor Corporation (ADR) (NYSE:TM). Just one analyst even follows the stock, and offers up a "hold" opinion, to boot. Plus, short interest skyrocketed 33% during the most recent reporting period, and the consensus 12-month price target of $141.85 represents expected upside of just 10% to TM's current price.

Should TM continue to shine on and off the charts, some positive analyst attention or an exodus of shorts could add contrarian gas to the tank.


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