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Toyota-King of the U.S. Roads

Updated on December 29, 2014
CliftonHRodriquez profile image

Clifton H. Rodriquez is a certified public accountant (CPA) by profession, but a passionate investment enthusiast.

Americans Associate Quality With Toyota

According to Consumer Reports Toyota vehicles, including the Lexus luxury brands, have the best value for the US consumers' dollars (www.money.cnn.com, December 18th, 2014 issue). Whenever the American consumer is convinced that a product has a high quality associated with it, they tend to vote with their dollars. Thus, despite statistics which show that Toyota is merely holding its own against the U.S. automakers, and the competition from other Japanese automakers like Nissan as well as the Korean auto makers, Toyota vehicles appear to be everywhere on the US roads. Why are they everywhere? Again, Americans trust Consumer Reports, and they say that Toyota vehicles are high quality products. Here is a little test that everyone can do for themselves. Readers should try to take a mental count of every Toyota vehicle, Lexus included, which either passes them on the road, or noted park somewhere in their community. After that mental note is taken, they should then try to see the number of US automaker vehicles, and determine which number is greater. However, during the past five (5) years (2009-2013) Toyota had a growth rate of 53.28%, but for the next five years (2014-2018) that rate is projected at only 33.70%. A projection is not a historical fact; it may or may not come to past.

Is Every Vehicle On the U.S. Road a Toyota?

This author conducted an unscientific study over two years ago. That study entailed checking parking lots at malls, parking lots, and taking note of vehicles on the road as well as on the occasional road trips. Although it was unscientific, the results and conclusion are mind blowing. In general, every mall parking lot as well as other parking lots seem to contain more Toyota vehicles than any other automaker, U.S. or foreign. The road trip results yielded similar results. Toyota vehicles seem to be present in the majority; often times the Toyota luxury brand (Lexus) would also be in the mix.

As a result of this little unscientific study, this author has no choice, but to conclude that Toyota growth rate for the next five (5) years will probably be closer to forty five (45) to fifty (50) percent as opposed to the thirty three point seventy (33.70%) projected in the Money Magazine article. Why? Consumer Reports states the fact. Toyota's stock will continue to reflect the fact that even investors have bought into the fact that Toyota will expand its share of the U.S. as well as the world car market. The stock climbed as high as $129.30 in 2014, but dropped as low as $116.00 on a less than favorable quarterly earnings report. The drop in sales and bottom line numbers was probably due to increased competition from the Korean automakers as well as aggressive marketing and advertising from the US automakers. The stock currently trades around $128.10. However, the company's has a respectable dividend yield of 1.98%. It has a net book value of $90.77 as of September 2014.During the past 12 months, Toyota Motor Corporation's (TM) average book value per share growth rate was 15.60 percent per year (www.gurufocus: Toyota Motor Corporation). Given this outstanding increase in the net book value rate, it will not be long before the net book value exceeds the current market price, providing that it stabilizes around $122-126.00. Thus, in a year or two, Toyota maybe viewed as a value play (i.e., whenever the net book value exceeds current market value) Okay, the statistics may not bear it out yet, but it appears from empirical data that Toyota Motor Corporation (TM) is well on its way to becoming the dominant player in the automaker market. However, given all of the competition in the industry as well as the other unforeseen variables.

Like all investments, investing in risk assets like stocks do carry substantial risk. Potential Investors are strongly advised and encouraged to diligently investigate any potential investment opportunity before committing capital to it. Investigating or vetting entails discussing the matter with prudent business advisers, who maybe more knowledgeable about the dynamics of the capital markets. Also, a wise and prudent investor should always assess their risk tolerance to determine the ability to accept the potential for loss.


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    • CliftonHRodriquez profile image
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      Clifton H. Rodriquez 3 years ago from Fort Lauderdale, Florida

      The stock is highly recommended via "www.tipranks.com". I believe in the company and its products. I will continue to commit capital to it every time I see a pull back in the stock price.

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      Carlette M. Logan 3 years ago

      I was seriously thinking about this company as a potential investment. I love the article.

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