Toyota stock

[elessar78]

To preface, I don't invest in individual stocks (yet), but I do fancy doing it one day.

Anyway, Toyota's stock price is taking a big hit from all the recalls and bad press. If it continues to drop, to say the $55–$60 range, would it become a good value buy?

Just curious if a major recall like this would affect a car company with Toyota's reputation for reliability in the long long run?

[disneysteve]

I was thinking the same thing but hadn't taken a look at the stock yet.

[wincrasher]

This is just piling on in the media right now. Politicians will be taking their swings at Toyota later this month at the Congressional hearings.

There may be a terrific buying opportunity.

In typical Japanese fashion, Toyota will make a major push to save face. They'll have a big program to push quality and retain customers. Expect a big shakeup with American management who really blew off this problem - as they typically do. All this news will effect the stock price.

But in the end, they will recover. It's a great long term buy if you get in at a good price.

[elessar78]

It was around $72 earlier today and dropping. Since 2000, the stock price has only been under $50 once. In 06–07 it was up in the $140 range, but we all know that stock prices were artificially high in that period.

[swanson719]

I'm no broker, but if it hits the $50's I would think it to be a great buy. Then again, I thought GM would be a good buy if it ever got below $2. Glad I didn't buy that.

[disneysteve]

I agree. I'd want to see it down near it's 52-week low which is about $52.

[Broken Arrow]

I thought this is such a great opportunity that I even blogged about it.

When it comes down to it, Toyota is still committed towards safety, fuel efficiency, and affordability. Those tenets haven't changed, and if anything, this recall only illustrates such a commitment.

What they're facing is an issue that can be readily fixed and requires no major changes within vehicle design and assembly, or the corporate infrastructure for that matter that we've had to see in American automakers.

Some are worried about the retracted words from the US Transportation secretary, the ensuing government hearings, or even tomorrow's earnings report (which by the way, posted improved financial outlook even though that tidbit is being eclipsed by the safety recall). Why? Negative press is exactly the kind of thing traders who are looking for a dip wants! Especially if it doesn't jive with the company fundamentals and the problems at hand.

Look, here's the thing: People are worried because it's a serious safety issue. And people have every right to be. However, that's a SAFETY issue, not a STOCK VALUATION issue. The company is still fundamentally sound. It still has a great balance sheet and a great product line. Toyota will fix this problem, and I'll be surprised if a year or two from now, we'll even remember talking about it.

I could certainly be wrong about all this, but... I'm not just talking about it. I do plan on putting my own money on the line as well. I'm just going to buy some, sit on it, and enjoy the 1.29% dividend while I ride this storm out.

However, I can guarantee you this: Toyota is going to come out of this with stronger, better products than ever. (I also wouldn't be surprised if they no longer do business with the outside contractor who made the pedal. Yes. Toyota didn't actually make the pedal, but they're taking the heat for it.)

As Warren Buffett once said, "Be greedy when others are fearful. Be fearful when others are greedy."

[EEinNJ]

Judging from the symptoms described in some of the tragic accidents, there is probably something more going on than floor mats or a sticky gas pedal linkage. When I first heard about this, I suspected a software problem, and now it's just come out that indeed, they are now investigating that there is an electronic control problem.

So there's really no telling yet what degree of liability, what the scope of the recall, and when they can start selling vehicles again. The stock market hates FUD!

[kork13]

Originally Posted by Broken Arrow

Look, here's the thing: People are worried because it's a serious safety issue. And people have every right to be. However, that's a SAFETY issue, not a STOCK VALUATION issue. The company is still fundamentally sound. It still has a great balance sheet and a great product line. Toyota will fix this problem, and I'll be surprised if a year or two from now, we'll even remember talking about it.

These are my thoughts exactly... I'm actually surprised by the traction that recent events are having against their stock. No matter what way you slice it, Toyota is still a VERY popular brand across the US and around the world. It has a fantastic history of safety, so the issues that are arising now appear (IMO) to be the exception rather than the rule (unlike various problems that other car companies have demonstrated for years on end). If it were a trend, sure, I could believe recent events being yet another nail in the coffin, leading to significant drops in the stock. But I don't see that as the case here, so the drops are a bit surprising. Stockholders seem to be spooked for some reason -- perhaps did Toyota's history lull them into complacency?

[Broken Arrow]

Originally Posted by kork13

But I don't see that as the case here, so the drops are a bit surprising. Stockholders seem to be spooked for some reason -- perhaps did Toyota's history lull them into complacency?

Well, I read that part of the problem is that Toyota tried to grow too big too fast. Of course, this is all in retrospect because when you think about it, who wouldn't try to grow their business? But in order to grow their international business, including here in the US, they've had to contract out a lot of parts. That in itself wasn't a bad idea either, but perhaps in all this complex international growth and contracting, they were not able to ensure their usual level of quality.

The other thing I speculate is that I think few would have suspected that something like this could happen to a company like Toyota. I suppose that makes it more newsworthy than if GM recalled one of their vehicles.

So, I really do think that there is a certain level of media hype heaped on top of a legitimate but temporary problem. However, EEinNJ did point out to yet another issue that I'll have to look into. If there is more to it, and if its systemic enough, it could change the playing field.

Nonetheless, this story is at least worth following because it stands out as a potential Salad Oil moment (where Warren Buffett bought a company that was beaten down by the market for simply having proximity to a scandal, but was in itself a fundamentally sound business). However, I don't think we'll see a 50% fire sale in this case. I think this one will swing more around the 10%-15% range, either way.

[wincrasher]

Originally Posted by Broken Arrow

The other thing I speculate is that I think few would have suspected that something like this could happen to a company like Toyota. I suppose that makes it more newsworthy than if GM recalled one of their vehicles.

Exactly. You don't hear anyone going off the deep end over the multitude of recalls by the big three. On the new last night they said Ford was looking into their own brake issues. Why not a big sell-off of Ford?

Toyota already has slipstreamed software changes in Prius production. They will most likely retrofit all the existing cars with the new program - a really easy fix.

The only thing that disappoints me with Toyota is the American management. Their dealer network and attitude towards customers leaves alot to be desired. Hopefully this kick in the ass will improve things dramatically.

But if you want a real eye opener for dealer arrogance - take a Mercedes Benz in and imply that there is something wrong with it design wise!

[Broken Arrow]

Originally Posted by wincrasher

The only thing that disappoints me with Toyota is the American management. Their dealer network and attitude towards customers leaves alot to be desired. Hopefully this kick in the ass will improve things dramatically.

Yeah, I'm in the market for a replacement car as well. I'm definitely going to look into Toyotas as I'll bet they're more willing to accommodate customers now.

But if you want a real eye opener for dealer arrogance - take a Mercedes Benz in and imply that there is something wrong with it design wise!

[kv968]

Originally Posted by disneysteve

I agree. I'd want to see it down near it's 52-week low which is about $52.

I don't think you're going to see that but somewhere around ~$60-62 would be attractive.

[disneysteve]

Originally Posted by kv968

I don't think you're going to see that but somewhere around ~$60-62 would be attractive.

I agree. I don't think it will drop to $50 either. $60 would be nice, though.

[Snodog]

If you go by Consumer Reports Toyota's reliability has slipped a little but is still very good.

I don't buy individual stocks but if I did I would be seriously considering Toyota.

The media is out of control, its like they have unleashed an all-out nuclear attack on the company.

[disneysteve]

Stock is up over $2 today. It may have dropped as far as it is going to. Time will tell.

[Broken Arrow]

Originally Posted by disneysteve

Stock is up over $2 today. It may have dropped as far as it is going to. Time will tell.

Yeah, it's quite the snap-back, considering that the overall market is bleeding red today. As a fast trade, now isn't a bad time to get out of it.

[marvholly]

I am just waiting to see all the individual AND insurance company lawsuits that are/will be filed by anyone even close to having had a problem of any sort w/any model. I do NOT think we have seen the last of the problems. It appears quality control has gone down the tubes for a number of years in the name of profit. This is a major change in corp culture going back quite a few years that will need to be altered again and will take years again.

I think w/more & more coming out in the news almost daily Toyota is going to have MAJOR ongoing issues for the shortterm foreseeable future.

Lawsuits will take YEARS to settle out and will greatly affect the company’s ability to pay ANY dividends. Any lawyer worth his salt WILL get an injunction against any such payment to insure that the funds are there to pay off all the claims. In addition costs will go up: Additional mfg costs, quality control costs, advertising costs and probably rebate/incentive/financing “deals” to try to regain market share.

[Slug]

I'd like to see the yield up at 2.5% before I jump in. That's 58, and I'm not sure it's dropping there.

I own 2 Toyotas. Love'em. Hopefully, this news will push down resales so I can get a used 2010 4Runner next year at a good deal.

[Broken Arrow]

The stock contracted 1.8% today, but I think what may end up being a bigger influence is the persisting European sovereign debts. Of course, that will affect the entire stock market, and not just TM.