Are Recalls Making Toyota Stock A Bargain?
You can hate the cars but still love the stock. Lost in the flurry of headlines recently about Toyota Motor’s recall over faulty gas pedals and brakes was news of a remarkable feat for an automaker these days: The Japanese company actually made a profit last quarter. Which raises an intriguing possibility: If Toyota strings together more profitable quarters, will investors kick themselves someday for missing a chance to have bought a piece of what is still arguably a great company on the cheap? Sean Thorpe, co-manager of foreign stock investments at Reed, Conner & Birdwell in Los Angeles, thinks so. He’ll talk your ear off about his profit estimates for Toyota and where he thinks the stock, down 19 percent in three weeks, should be trading. But the specifics of his argument, or whether he’s even right, are less important than his instinct here: Buy on the bad news, not the good. It’s a tiresome bromide, but the fact is, investors frequently do the opposite, taking comfort in buying and
