Today is the last meeting of OIG of this semester. We didn’t get a chance to update the portfolio, however, here is a stock that might be of interest to you.
Honda (NYSE: HMC) is a good stock to hold during the summer (time horizon of 4-6 months), with a conservative target price of $40 (now $35). It’s a good choice to hold it and give it enough time for the automaker and the market to digest the loss of the earthquake.
Reasons are:
- Discounted price after Japanese earthquake, low PE (9.51) compared with industry (18.7)
- Worse time to hold may have passed (they have started to resume productions at half-level).http://www.nytimes.com/2011/04/19/business/global/19honda.html
- Compared with other Japan automakers, it has a fuel efficient focus, good when the oil price keep climbing, and it is greener. (Oil commodity price: http://money.cnn.com/data/commodities/)
- Comparables such as Toyota(heavily affected by the quake, had to shut down EU production http://blogs.wsj.com/drivers-seat/2011/04/13/toyota-to-halt-production-in-europe/?mod=google_news_blog) and Nissan (had to recall 5300 Leaf cars http://infoglobalnews.com/2011/04/17/111616/nissan-recall-leaf.html) all had respective problems.
- Solid profit performance for the past few years, large cap. 3rd largest automaker in Japan, 7th in the world.
- G-7 has intervened to make Yen cheaper after the quake, making it easier for profit margin to grow.
If you have any questions, please email Lingyi @ lsun@brynmawr.edu for details.