diablo1

I just bought some shares of the Toyota ADR (NYSE: TM) today. Just wondering how many of you other Lexus/Toyota enthusiasts own shares. I wish I had bought a year ago, but oh well, a year ago I didn't even know much about Lexus or Toyota at all. Now I know they're going to take over the world. Vote up!

videcormeum

I'm not sure if I consider Toyota a good buy right now. The stock got downgraded by BoA-s a few weeks ago because of an expected dip in earnings and concern over the potential appreciation of the yen against the dollar (which would decrease Toyota's earnings from US operations).

But those are near-term risks - in the long-run you'll be fine. Toyota is indeed on course to take over the world ...

M.

foofighter

Ford and GM are a better buy

diablo1

Ya I'm definitely a long-term buyer, but I do recognize the currency risk in there...

Lexmex

It's probably one of those stocks that you can hold on to and won't suffer a big loss, but may not make much gain until the mid-to-long term. Just because they are having success doesn't mean the market hasn't already taken that into account and that he stock will rise.

diablo1

Well... You could have said the same thing when GOOG was at 200. Or AAPL at 40.
Analyst downgrades are a great chance to get a good company at a slight discount.

newr

I agree. Toyota maybe a better company but Ford and GM stocks are better buy.... you have nothing to lose but everything to gain.

videcormeum

I know that but unless Toyota beats estimates, the efficient market hypothesis (which LexMex alluded to) indicates expectations for near-future earnings have been considered and factored in the valuation. And with Lexus' difficulty in Japan and Europe and quality seeming to suffer on some of the new Toyota/Lexus products, along w/ the risks I mentioned earlier that resulted in the downgrade, it's not on my short-term list of hot stocks.

But, as I said in my first post, in the long run you'll be fine.

M.

bitkahuna

iTrader: (20)

About GM or Ford being better buys - I think Ford is a better bet - it's loss per share isn't that large, but GM's is GIGANTIC. I still think there's a good chance GM will file for bankruptcy.

Ford's market cap is less than $13 billion which is really tiny when you think about their global reach, brands, etc.

diablo1

It's not clear to me that F or GM are worth anything, let alone billions of dollars. Sure they have factories and whatnot, but they also have insane amounts of debt - especially GM. I think it's 50/50 on whether their net value is positive or negative. To me it's a question of getting a worthless company at a cheap price, or a solid company at a fair price. I'll choose the latter any day.

If you believe the efficient market hypothesis then you probably shouldn't be buying individual stocks, right? Just buy a broad index fund and save the time?

I work at a hedge fund so I'm not a huge fan of EMH.

Lexmex

Toyota is so large that the returns aren't so great as when they were a younger company. A tech company closer to Toyota in terms of stock would be Microsoft.

diablo1

When AAPL went on its run from 10 to 70, it had already been a publicly traded company for 19 years. Haliburton has been publicly traded since 1982 and recently went on a run from 20 to 70. I don't think you can really say that the age of a company has much to do with expected returns.

Thanks for all the feedback guys. It's cool to hear the other side of the story, and what the arguments are against buying Toyota stock.

Lexmex

Apple had its problems, too.

I think what I am trying to say is that Microsoft has continued to grow since it started and its bumps aren't nearly as bad as say an Apple in the fact it continues to dominate the market. Yet, it isn't the growth stock it one was, more of a long-term deal as it really dominates and doesn't have the same level of growth as it once had.

Toyota is one great company and I have seen a similar type of growth pattern. Now, should Toyota come to dominate one day like a Microsoft, my concern is diminishing returns or can they be expected to grow and how much have the institutional investors figured this out.

diablo1

I'm not sure I understand your reasoning here. Toyota is not a market dominator in the sense of Microsoft or other near-monopolies. So, you are worried that Toyota will eventually become so dominant that they won't have room to grow? If they were already in that position, I can see being worried about growth, but since they are nowhere near that now, shouldn't it actually be a good thing that they are on their way to domination?

It's a mature company and not a growth company or a startup. But I think the stock still has a ways to go on the upside. Anyway, thanks for your opinions. Happy investing everyone.

Lexmex

I hope it has a lot more room to grow. What I am worried about is that it is moving quickly in terms of its growth and that I hope its growth expectations don't get so big that it can't meet them and that the profit one think they might get may not be realized. It's one thing to make a profit and another thing to make shareholders happy.

All the best for Toyota.