Sep 22 2008
Has Toyota found its legs?
Several weeks ago, I mentioned that if you were feeling brave, it might be a great time to jump in on Toyota (TM). During last week’s correction, the stock dropped to its low and has come rushing back right into the same territory it was before all the bailouts. Now I’m wondering if it shouldn’t be our ”watch” for the week.
We need to be patient and be sure the market is stable. If the Dow is going to go down dramatically in the net few weeks, we can wait and buy in at a better price. Why TM and not other stocks? Well, most of our recommendations are hedged by strong dividends. High dividends help make up for the loss in equity on a share price. And since we are buying only when dividend stocks are at their traditional low, we benefit both from luxurious dividends and the future the stock holds for us.
TM doesn’t fall into the dividend paying investment category, but instead is a growth stock. They are riskier during times of market instability. In this case, we will continue to watch for market strength and then make a call to buy if the markets look more stable.
Toyota has suffered from the economic downturn in that people are not really buying cars. But when they do buy, demand for Toyota’s cars are on the top. While Ford and GM were making bigger gas guzzlers, Toyota sensibly invested in making a hybrid. During this downturn, GM and Ford are at the drawing board trying to figure out how to catch up. Toyota’s taking it current operations and streamlining it. I like their business philosophy, and the care they take in managing their business. This is one time in which you would be investing in the smart management, and that is always wise.
Let’s watch the stability of the market this week and check on the stock by Thursday.
