Why Is Toyota Motor The Best Auto Stock To Buy Now?

Toyota Motors' (TM) stock surged more than 2% when the automaker reported a net profit of $3.2 billion, which was more than three times its net profit a year ago. Revenue also increased by 18%. The Japanese automaker performed well in both Japan and North America, the two regions from which it gets most of its revenue. The company has been losing out in China due to the Senkaku/Diaoyu island dispute between China and Japan. However, despite a massive loss of sales in China, the company still managed to push the global net profit forecast up from $9.45 billion to $9.7 billion, which reflects its strong performance in other parts of the world.

The company is focusing on trimming its costs. The company has increased its forecast for net profits but lowered the revenue outlook for 2012. TM expects to save almost 300 billion Yen in profits this year.
The company sold a total of 7.4 million vehicles in the first nine months of the year. That is more than the sales of any other car manufacturer in the world. Therefore, the company is well on its way to becoming the leading carmaker of the world, a position that it enjoyed from 2008 to 2010. The important thing to mention here is that the improvement in sales and market share did not come from incentives because the company had scaled back its discount. The average incentive per car dropped from $2,368 a car in the same period last year to $1,899 for this quarter.

The stock is currently trading at a cheap multiple of 9x. It also pays a dividend yield of 1.91%. The company topped three of its last four earnings estimates. The sell-side expects the company's earnings to grow by 41% per annum for the next five years. Read more