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Toyota Motor ADR Rep 10 Ord Shs TM

Toyota Motor Corp is a Japan-based company engaged in the automobile business, finance business and other businesses. The Company operates in three business segments. The Automotive segment is engaged in the design, manufacture, and sale of automobiles, including sedans, minivans, compacts, sport utility vehicles, and trucks, as well as related parts and accessories. The Finance segment is engaged in finance and vehicle leasing business. The Other segment is engaged in the design, manufacture and sale of houses, as well as conduct information communication business. The Company is also engaged in the control of manufacturing and sales companies, as well as public relations and research activities business in North American and Europe.


NYSE:TM - Post by User

Post by scissors14on Feb 06, 2013 1:51am
366 Views
Post# 20944475

Buy Toyota to profit from a falling yen

Buy Toyota to profit from a falling yen

Buy Toyota to profit from a falling yen

posted on February 5, 2013 at 6:23 pm

toyota

You certainly can’t accuse Toyota Motor (TM), the world’s largest carmaker, of letting the falling yen go to its head.

Yes, the company raised its earnings forecast to a five-year high on February 5. Toyota told analysts that it expects earnings of 860 billion yen ($9.3 billion) for the fiscal year that ends on March 10. And much of that profit comes from a swing from a strong (78 yen to the dollar in October 2012) to a weak yen (93.54 yen to the dollar on February 5, 2013.) The strong yen cost Japan’s automakers 3.68 trillion yen in the five years ended in March 2012, Credit Suisse estimates. The automakers will recoup about 1 trillion yen in the two fiscal years that end in March 2013 and 2014, Credit Suisse calculates.

What’s interesting to me is how extremely conservative Toyota was about the yen/dollar exchange rate in its earnings forecast. The company did indeed revise its forecast for the yen-dollar exchange rate from 79 yen to the dollar to… get ready…81. Considering that the yen traded at 93.54 to the dollar today, I’d say Toyota’s new forecast for company profit is already in the money. Toyota also forecast that the yen would fall to 105 to the euro. It’s currently at 126 to the euro.

A cheaper yen will help Toyota sell more cars against Detroit, and Korean and European makers such as BMW. Toyota’s share of the U.S. market has climbed for the last two months to the highest level since May 2012. In 2012 Toyota outsold both General Motors (GM) and Volkswagen and regained the global industry sales crown it lost to General Motors in 2011. Toyota expects to deliver 8.85 million units in the fiscal year that ends in March—a forecast that it raised by 100,000 units yesterday. For fiscal 2013 the company projects that it will deliver 9.91 million vehicles.

I think Toyota is one of the bet ways to play the yen, combining as it does a stock with sound fundamentals and a company with huge yen exposure through its exports. I calculate a target price of $120 for the shares. I’m adding Toyota to my Jubak’s Picks portfolio https://jubakpicks.com/the-jubak-picks/ with this post.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund https://jubakfund.com/, may or may not now own positions in any stock mentioned in this post. The fund did not own shares of Toyota as of the end of September. For a full list of the stocks in the fund as of the end of September see the fund’s portfolio at https://jubakfund.com/about-the-fund/holdings/

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