Seeking Alpha
Long/short equity, momentum, special situations
Profile| Send Message|
( followers)

By Brendan Gilmartin

Summary: The leading automakers are scheduled to report monthly auto sales on Thursday, December 1. Several factors appear to suggest November could be a solid month:

  • The National Retail Federation reported that Black Friday Sales climbed 16% to a record $52.4 million, with an estimated 226 million customers visiting stores – a sign the U.S. consumer is turning more upbeat.
  • The Conference Board reported on November 29 that U.S. Consumer Confidence jumped 15 points to 56.0, the highest level since July, and evidence that consumers are becoming more willing to spend.
  • The ADP Employment report on November 30 showed U.S. payrolls climbed by 206,000, nearly doubling many forecasts.
  • The impact on parts supplies from the floods in Thailand appears to be subsiding.

Technically, several of the top names – General Motors (NYSE:GM), Ford (NYSE:F), and Toyota Motor (NYSE:TM) are exhibiting oversold conditions, while valuation levels are at historically low levels on a relative basis.

General Motors - Expected Release Time: 10:30 a.m. EST

Overview: General Motors is due to report its November sales at approximately 10:30 a.m. EST. GM is coming off a disappointing report for October when sales rose a mere 2.0%, below estimates of 6% to 7%, but indicated it is “well-positioned going forward.” An upbeat start to the holiday shopping period points to a resurgent consumer in North America and may mitigate some of the downside risk tied to the impact of the floods in Thailand, the fallout from the federal investigation into the Chevy Volt ™, and the slowdown in Europe. Note that hedge fund guru David Einhorn also disclosed a significant purchase in GM shares during the 3Q period, putting a near-term floor in the stock.

Technical Review: GM shares recently bounced back toward $21 resistance – a level going back to late August. A positive report could lift shares toward the 20-Day SMA near $22, with further upside toward $23. Support is at $20, followed by the October low near $19. (Chart courtesy of StockCharts.com)

Estimates

TrueCar.com: 6.4% (Source: www.truecar.com)

Edmunds.com: 9.9% (Source: www.edmunds.com)


(Click to enlarge)

Ford Motor - Expected Release Time: 12:00 p.m. EST

Overview: Ford is scheduled to report November sales at approximately 12:00 p.m. EST. Estimates call for light vehicle sales to rise over 10% on a y/y basis, despite softness in Europe, where the company recently announced plans to lay off 4,000 workers. Ahead of the release, sales analyst Erich Merkle told reporters at the Dearborn, MI headquarters that November sales were tracking well, with a continued jump in small crossover sales, particularly the Ford Escape© and a move toward smaller, fuel-efficient vehicles.

Technical Review: Ford is approaching $10.50 resistance, just below the negative intersection of the 20-Day & 50-Day SMA. A break above this level could carry the shares toward $11, followed by the October high bear $12.50. Support is at the recent lows in the $9/$9.50 area. (Chart courtesy of StockCharts.com)

Estimates

TrueCar.com: 10.4% (Source: www.truecar.com)

Edmunds.com: 12.1% (Source: www.edmunds.com)


(Click to enlarge)

Toyota Motor - Expected Release Time: 1:30 p.m. EST

Overview: Toyota Motor will post its monthly sales report between 1:00 p.m. and 2:00 p.m. EST. Production declines stemming from the recent floods in Thailand, the lingering impact of the March earthquake, and the strengthening Yen to recent all-time highs versus the Dollar continue to weigh on Toyota, with the ADRs recently falling to a 52-week low of $60.37. Rival Honda Motor recently reported it continues to struggle with the disruptions caused by the March earthquake, coupled with the supply issues due to the Thailand floods.

Technical Review: Toyota Motor is about 9% off the 52-week low of, pushing back above the 20-Day SMA near $64, before bumping into resistance at the 50-Day SMA near $66. From here, there is potential upside to $72, while the aforementioned resistance level of $64 becomes support, followed by $62. (Chart courtesy of StockCharts.com)

Estimates

TrueCar.com: 0.4% (Source: www.truecar.com)

Edmunds.com: 3.5% (Source: www.edmunds.com)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

DISCLAIMER: By using this report, you acknowledge that Selerity, Inc. is in no way liable for losses or gains arising out of commentary, analysis, and or data in this report. Your investment decisions and recommendations are made entirely at your discretion. Selerity does not own securities in companies that they write about, is not an investment adviser, and the content contained herein is not an endorsement to buy or sell any securities. No content published as part of this report constitutes a recommendation that any particular investment, security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Source: Monthly Auto Sales: November 2011