Jim Cramer is the co-founder and the chairman of the TheStreet.com, Inc. Jim Cramer’s TheStreet.com lists their top stock picks in each industry regularly. While I was writing about Jim Cramer’s Mad Money stock picks, I have decided to write about TheStreet’s stock picks as well. I have investigated these stocks from a fundamental perspective, adding my O-Metrix Grading System where possible.
Here is a fundamental analysis on the five best auto stocks picked by The Street:
Stock Name | Ticker | O-Metrix Score | My Take |
Thor Industries | 9.22 | Buy | |
Ford Motor Co. | 5.58 | Buy | |
Honda Motor Co. | 5.04 | Buy | |
Toyota Motor Corp. | 5.41 | Avoid for Now | |
Winnebago Industries | 4.94 | Hold | |
Tesla Motors | N/A | Avoid |
Data obtained from Finviz/Morningstar and is current as of Sep 1
Thor Industries will repurchase 1.8% of its common stock at $20 per share. As of the Sep 1 close, Thor was trading at a P/E ratio of 10.4, and a forward P/E ratio of 9.7. Analysts expect the company to have an annual EPS growth of 15.7% in the next five years. It paid a 2.85% dividend last year, while the profit margin was 4.2%.
Earnings increased by 570.53% this year, and sales rose by 25.27% this quarter. Target price is $36.25, which implies a 71.9% upside potential. The stock is currently trading 45.77% lower than its 52-week high, while it returned -14.9% in the last twelve months. O-Metrix score of the company is 9.22, and it has no debts since 2006. Institutions hold 75.92% of the stock. P/B (1.5), P/S (0.4), and debt-to equity ratio (0.0) are solid green flags. ROE is 15.5%, slightly better than the industry average of 15.0%. This is a stock to dive into.
Ford Motor sold 175.220 vehicles in August. The company shows a trailing P/E ratio of 6.3, and a forward P/E ratio of 5.7, as of Sep 1. Estimated annual EPS growth for the next five years is 6.7%. Profit margin (5.2%) is slightly better than the industry average of 4.1%, while Ford has no dividend policy.
The company has an O-Metrix score of 5.58, and it is trading 42.80% lower than its 52-week high. Target price indicates an about 70.5% increase potential, whereas it returned -7.4% in a year. Although debt-to assets ratio is at alarming rates, it is slightly going down for the last five quarters. Earnings increased by 92.86% this year, and insider transactions have increased by 85.78% in the last six months. ROE is 786.86%. Ford has a five-star rating from Morningstar. Moreover, current price offers an advantageous entry point.
Honda Motor is suffering from big sale drops within the last four months. The Tokyo-based Honda has a P/E ratio of 8.5, and a forward P/E ratio of 8.1, as of Sep 1. Five-year annualized EPS growth forecast is 6.20%. Profit margin is 6.0%, while it paid a 2.17% dividend.
Earnings increased by 99.90% this year, and the stock is currently trading 26.35% lower than its 52-week high. Target price is $41.10, which indicates a 25.2% upside movement potential. Honda returned -3.5% in the last twelve months, whereas it has a good O-Metrix score of 5.04. Debt-to assets ratio is nearly stable for the last five quarters. Debt-to equity ratio is 0.5, far better than the industry average of 2.3. Moreover, it has a four-star rating from Morningstar. I believe that the current downfall created an opportune entry point.
Toyota’s August sales fell approximately 13%. The company has a P/E ratio of 39.2, and a forward P/E ratio of 10.0, as of the Sep 1 close. Analysts estimate a 25.2% annualized EPS growth for the next five years. Profit margin (1.3%) is crushed by the industry average of 4.1%, while it paid a 1.33% dividend last year.
It has an O-Metrix score of 5.41, and target price implies a 22.8% upside movement potential. The stock is trading 24.21% lower than its 52-week high, whereas it returned 4.3% in the last twelve months. Debt-to assets ratio is nearly stable for the last five quarters, and earnings decreased by 99.39% this quarter. SMA50 and SMA200 are -10.10% and -12.32%, respectively. Operating margin is 0.9%, and ROE is 2.1%, both of which are way below their industry averages. It is clearly impossible for Toyota to reach its long-term EPS growth estimation under these circumstances, let alone the -20.95% EPS growth of past five years. Buying Toyota would not be a good move in my opinion. Expectations are pretty high for the next year. I would rather wait until earnings confirm the expectations.
Winnebago will receive its 16th consecutive RVDA Quality Circle Award on Oct 5. The Iowa-based Winnebago shows a trailing P/E ratio of 16.4, and a forward P/E ratio of 20.0, as of Sep 1. Analysts expect the company to have an 18.0% annualized EPS growth in the next five years. It has no dividend policy, while the profit margin is 2.7%.
Winnebago has an O-Metrix score of 4.94, while it returned -20.9% in the last twelve months. Target price implies a 25.7% upside potential, and it is trading 55.30% lower than its 52-week high. Earnings increased by 112.98% this year. P/S is 0.4, and debt-to equity ratio is 0.0, both of which are way better than their industry averages. Winnebago has zero debts for the last five quarters. Insider transactions have increased by 86.53% in the last six months, and institutions own 99.70% of the stock.
On the other hand, earnings decreased by 80.09% this quarter. SMA50 and SMA200 are -10.06% and -38.06%, respectively. Operating margin is 3.0%, and ROE is 13.1%, both of which are below their industry averages. 3 out of 4 analysts covering the company recommend holding. My opinion is the same. Hold if you own it, but do not buy.
Tesla Motors recently hired four vice presidents to expand its production. The company shows a trailing P/E ratio of -11.8, and a forward P/E ratio of -14.3, as of the Sep 1 close. Estimated annual EPS growth for the next five years is 20.0%. Tesla offers no dividend yield.
The company had an EPS growth of 61.67% this year, and 88.04% this quarter. Institutional transactions have increased by 22.69% in the last three months. Target price is $36.38, indicating a 51.5% upside movement potential. The stock is currently trading 34.10% lower than its 52-week high, while it returned 13.9% in a year. Debt-to equity ratio is 0.4, way better than the industry average of 2.3.
On the other hand, the stock recently multiple-bottomed. P/B (7.2), P/S (13.1), and operating margin (-111.9%) are hopeless red flags. ROA and ROI are -48.89% and -176.60%, respectively. Debt-to assets ratio is totally unstable. While SMA50 is -10.09%, SMA200 is -10.32%. Moreover, the stock is highly volatile. I see no reason to have any relations with Tesla Motors for the time being. Besides there are other companies, such as Coda Automotive which plans to offer what exactly is offered by Tesla, for a much lower price.
Find more information on O-Metrix Grading System here.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.