Toyota (TM)
Posted: Sat Sep 17, 2016 2:09 pmnot vested
International Stocks to Buy: Toyota (TM)
Country: Japan
Forward P/E Ratio: 10
The Japanese yen has gained nearly 20% over the past year, and it’s wreaking havoc on Japanese exporters. The exchange rate that the Japanese government estimates is the breakeven level for exporters is 103.2 yen to the dollar.
Well, as I’m writing this, the yen trades at 102.2. So at current exchange rates, Japan’s exporters lose money.
That’s bad for an automaker like Toyota Motor Corp (ADR) (NYSE:TM) that depends heavily on sales in markets outside of Japan.
But here’s the thing. While is yen is expensive today, I don’t expect it to stay that way for long. Japan’s economy is stalling out again. Over the past four quarters, Japanese GDP grew at an average rate of just 0.2%.
So Japan’s government will be putting renewed pressure on the Bank of Japan to push the currency lower. Furthermore, as the Federal Reserve moves closer to raising rates, that should push the U.S. dollar higher.
So, Toyota should be very close to getting a much needed currency tailwind from a sagging yen. And given that Toyota trades for a modest 10 times next year’s expected earnings and yields over 3%, I think it’s likely that Toyota outpaces the U.S. market by a healthy margin.
Source: Investor Place
International Stocks to Buy: Toyota (TM)
Country: Japan
Forward P/E Ratio: 10
The Japanese yen has gained nearly 20% over the past year, and it’s wreaking havoc on Japanese exporters. The exchange rate that the Japanese government estimates is the breakeven level for exporters is 103.2 yen to the dollar.
Well, as I’m writing this, the yen trades at 102.2. So at current exchange rates, Japan’s exporters lose money.
That’s bad for an automaker like Toyota Motor Corp (ADR) (NYSE:TM) that depends heavily on sales in markets outside of Japan.
But here’s the thing. While is yen is expensive today, I don’t expect it to stay that way for long. Japan’s economy is stalling out again. Over the past four quarters, Japanese GDP grew at an average rate of just 0.2%.
So Japan’s government will be putting renewed pressure on the Bank of Japan to push the currency lower. Furthermore, as the Federal Reserve moves closer to raising rates, that should push the U.S. dollar higher.
So, Toyota should be very close to getting a much needed currency tailwind from a sagging yen. And given that Toyota trades for a modest 10 times next year’s expected earnings and yields over 3%, I think it’s likely that Toyota outpaces the U.S. market by a healthy margin.
Source: Investor Place