Market Mad House

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Long Ideas

Is Toyota the best Value in Electric Vehicles?

The world’s largest automaker; Toyota (NYSE: TM), might be the best long-term buy and hold play in the automotive sector.

The automotive giant is planning to bring out an electric vehicle with a solid-state battery that might charge up in a few minutes, Popular Mechanics and Japan’s Chunichi Shimbun reported. Those batteries are also supposed to be safer because they do not use lithium like Tesla’s (NASDAQ: TSLA) power packs.

The unnamed vehicle is not supposed to be available until 2022 so this is a fairly speculative play. Despite that Toyota will still be a major player in electric vehicles; it is planning to start marketing an electric SUV in China in 2019, Reuters reported.

Is Toyota the Best Auto Stock?

All this will make investors wonder if Toyota is the best stock to buy to cash in on electric vehicles. The answer might be yes because of some of the numbers for Toyota Motor I found at ycharts.

The reasons Toyota is a value investment include:

  • Growing revenues of $359.65 billion reported on June 30, 2017. Those revenues are growing at an almost astronomic rate, in June 2016 Toyota reported revenues of $240.03 billion.

  • If these figures are accurate Toyota’s revenues grew by $119.62 billion over the year that ended on June 30, 2017.


  • A net income of $24.37 billion on June 30, 2017. That net income grew by $5.80 billion between June 2016 and June 2017. Toyota reported a net income of $18.99 billion for second quarter 2016, and $24.37 billion for the same period in 2017.


  • A free cash flow of $1.799 billion on June 30, 2017.


  • Assets of $441.44 billion on June 30, 2017. These assets were an increase over the $433.09 billion reported for the same date in 2016.


  • Cash and short-term investments of $43.46 billion on June 30, 2017. This number was actually down from $46.86 billion a year earlier, but it’s still great.

  • $42.71 billion in cash from operations on June 30, 2017. This too was an increase from $38.83 billion on June 30, 2016.


  • A market capitalization of $168.02 billion on August 22, 2017.


  • An enterprise value of $304.87 billion on August 22, 2017.


All this means that Toyota is making a lot of money but it’s not a value investment because the stock is overvalued. Toyota was trading at $112.96 a share on August 122, 2017. Two other automakers that make a lot of money; General Motors (NYSE: GM) and Ford Motor (NYSE: F), were a lot cheaper on the same day. Ford was trading at $10.70 and GM was trading at $35.66 a share on that day.

Toyota Beats Tesla

Despite that, Toyota is still a far investment at $112.96 a share, than Tesla; which was trading for a moronic $339.70 on August 22, 2017. Tesla reported revenues of just $10.07 billion and a loss of $-766.13 million instead of an income on June 30, 2017.

Despite its’ high price Toyota still rewarded investors with a return on equity of 15.55% on June 30, 2017. Those investors also received a dividend of $1.966 nearly $2 on March 2017.

That makes Toyota one of the best dividend stocks around; last year on March 29, 2016 it paid $2.015 in dividends and $1.772 in dividends on September 28, 2016. So if you are looking for a widows and orphans stock in automotive I’d say Toyota was it.

Now there were some numbers I did not like, unlike its’ American peers, Toyota loses money from cash from financing (-$4.30 billion on June 30, compared to $17.65 billion for GM). Although the revenue do not fluctuate wildly like they do at some of its peers.

Stay away from Tesla Stock

Still if you want a safe long-term investment in electric vehicles Toyota is a great choice. If you want to take a risk on electrics try Fiat Chrysler (NYSE: FCAU) or Ford (NYSE: F).

Fiat Chrysler was trading at $13.46 a share on August 22, 2017, but it is planning to bring out an electric Maserati; and is building a plugin Chrysler Pacifica van that can be easily converted to all-electric. Ford was trading for $10.69 a share on 22 August, 2017, but it is planning 13 electric vehicles including variants of the F-150 pickup and Transit van, the Detroit Free Press reported. The company is also planning an electric SUV and two electric police cars.

What this means is that there is no reason for anybody to buy Tesla there are far better electric vehicle stocks out there. For the risk takers there’s Ford and FCAU, for the risk-adverse there’s Toyota.

My prediction is that if the rumors about Toyota’s solid-state battery true it would put Elon Musk’s Gigafactory out of business. Although it should be noted that Toyota’s first electric SUV will use e a plain lithium-ion power pack, so we should be skeptical of such claims.

Toyota is a Great Contrarian Investment

This new battery-tech is certainly coming at the right time, because the governments of France and the United Kingdom have announced plans to ban the sale of internal combustion engine vehicles by 2040 and 2050. Not to be outdone, German Chancellor Angela Merkel is talking about banning “clean diesel” vehicles before then.

All this makes Toyota a great investment for the future because can manufacture two kinds of zero pollution autos: electrics and hydrogen-fuel cell cars. The big drawback to hydrogen fuel cell vehicles is that they require special filling stations. Therefore Toyota might be the best long term auto investment around.

Either way Toyota is now a great long term contrarian play in autos. It’s a good company because you will not lose money with this stock no matter what the cars of the future run upon.