Japanese Carmakers Can Live With High Oil

Article Excerpt

We generally confine our recommendations to American companies, but from time to time we make an exception. That’s what we did in the case of two Japanese carmakers Toyota and Honda, and it paid off nicely for our readers. Although overall car sales in the United States are falling, these two continue to gain market share from U.S. automakers. Their appealing line-ups of fuel-efficient vehicles should spur their sales for the next several years. Their strong reputations for quality and service have let them build up a large base of loyal customers. Thanks to their sharp rise in the past two years, Toyota and Honda now trade around 14 times earnings. That’s high for cyclical business like automobiles. Rising steel, labor and other costs could squeeze their profit margins in the next few years. We feel that both companies still have lots of growth ahead. We still see both as buys for long-term gains. TOYOTA MOTOR CORP. ADRs $120 (New York symbol TM; Conservative…

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