GOODYEAR TIRE & RUBBER CO. $27.23 - Nasdaq symbol GT

GOODYEAR TIRE & RUBBER CO. $27.23 (Nasdaq symbol GT; TSINetwork Rating: Extra Risk) (330-796-2122; www.goodyear.com; Shares outstanding: 274.6 million; Market cap: $7.5 billion; Dividend yield: 0.9%) dipped as low as $18.87 in October but has since rebounded. It’s now up 11.5% since we made it our #1 pick for 2014 in our February issue at $24.42. In U.S. dollar terms, the shares have gained 16.9%.

In the quarter ended September 30, 2014, Goodyear’s sales fell 6.9%, to $4.7 billion from $5.0 billion a year earlier. The company sold 2% fewer tires worldwide, including a 4% drop in North America as car dealers stocked up on cheaper Chinese-made tires ahead of an expected U.S. tariff.

But even with the lower revenue, earnings jumped 39.9%, to $242.0 million, or $0.87 a share. A year earlier, it earned $190.0 million, or $0.68 a share.

Goodyear’s costs, including for oil, rubber and other raw materials, keep falling. As well, it now has a favourable labour deal with the United Steelworkers.

The company has also made several moves aimed at enhancing shareholder value, including a 20.0% increase in its quarterly dividend in September 2014, to $0.06 a share from $0.05. The shares now yield 0.9%.

The stock trades at just 8.6 times the $3.15 a share the company is forecast to earn in 2015.

Goodyear Tire & Rubber is a buy.

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