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In this article, we will provide you with financial fundamental analysis of discount retail companies on U.S. stock exchanges. For each company, we have provided price targets, buy/sell/hold ratings, buy/sell ranges and theses. Additionally, using a multitude of financial analytical ratios and comparisons, we have given each company a score on growth, profitability, financial health, value and management indices to compare each company and see where companies excel and where they have weaknesses. We have featured four of the 12 companies in the full report, which can be seen here.

We have initiated coverage on the following companies - Polaris (NYSE:PII), General Motors (NYSE:GM), Harley-Davidson (NYSE:HOG), Thor Industries (NYSE:THO), Tata Motors (NYSE:TTM), Toyota Motors (NYSE:TM), Winnebago (NYSE:WGO), Tesla (NASDAQ:TSLA), Drew (NYSE:DW), Ford (NYSE:F), and Honda Motor (NYSE:HMC).

(Click charts to expand)

Ford Motor , Hold, PT at $12 -

Despite its global prominence and brand name, we believe upside is fairly limited in Ford right now. We believe that while the company has some definite positive value play signs, we see some limitations to upside due to growth, profitability and management issues.

One of the largest issues plaguing Ford is the company's roughly $100B in debt. That number takes a huge hit to the company's equity value that is distributed amongst 3.8B outstanding shares. Cutting that debt in half would bring our price target to $26. Right now, we see debt as the #1 issue for Ford. The company needs to have strong free cash flow to help battle this debt and not dilute the shares raising money to pay off debt. Luckily, FCF margin has improved by over 200% in the past five years.

Profitability is another issue for Ford. We do not see a lot of upside in margins right now from this area. It has improved a lot the past two years, but the company has not seen operating margin over 6% in the past 10 years. The TTM operating margin is 5.2%. There is some upside there, but it's not very strong.

Additionally, we worry about margins as the company continues to see a shift in spending habits away from SUVs to more economical and eco-friendly cars. We do believe the automaker has attractive eco-friendly options that can take advantage of that move, but the margins are less on these vehicles versus SUVs. That issue can press margins.

Look for debt to go down. If so, buy Ford.

General Motors , Hold, PT at $25 -

General Motors surprised us by being our second-rated company in overall scoring for EquityAnalytics. The company still seems like a Hold at this point with limited upside. We do believe the comeback from the abyss that GM made is impressive, but that does not mean it's a great place for your money.

One of the main issues for GM remains its European arm, Opel. The business there continues to struggle, which is only being further magnified by the fact that the crisis in Europe is lingering strongly. We believe that issues there will continue to cloud the company's stock price moving forward.

The company has come out of the bailout with great financial health though. The company has just under $12B in debt, compare that with Ford's $100B. It has a strong amount of cash on hand, and it is seeing strong sales in America and China.

If the company can put Europe behind it, we think that it offers a nice pickup. The company has a very low P/E at 6. Its future P/E is actually a little bit higher due to near-term issues with European losses.

We would say a late 2012 pickup of GM stock might not be a bad idea as we get an idea of how 2013 will shape for Opel. Buy on any dip to $20.


Harley-Davidson , Hold, PT at $42 -

Harley-Davidson ranked third in our EquityAnalytics scoring as the company operates one of the strongest economic moats in the industry and can maintain premium-pricing do to this moat. The only issue for the company is that it will struggle during tough economic times like we saw in 2008 and 2009 as would-be buyers put off larger ticket items rather than substitute.

We do believe that the stock has gotten a bit ahead of itself as of late and valuations are pretty fair right now. The stock has jumped more than 20% since the beginning of December, and we believe that the stock is very fairly valued right now. The company's 18 PE ratio is pretty solid right now, and the company has a small yield on its dividend.

Profitability has been good, and margins have been improving. How much more upside does it have right now? The operating margins were as high as 25% - 30% before the crisis started, but they should not be able to get there in the near term again. Discretionary spending is still limited.

We would love to pick up shares on a nice dip as the company is one of the best off financially in the industry and has the best economic moat among all 12 companies.

Polaris Industries , Hold, PT at $73

Polaris Industries is our top pick in the sector. The company has a great economic moat, great profitability, growth, financial health and management. It is in a nice economic moat with strong quality products, strong distribution channels and good innovation. The company does have some competition, but it owns the top market share in its industry.

The company continues to maintain great profitability metrics despite the issues with economic uncertainties. The company has improved its profitability metrics over the past year and five years. Most companies in the industry have not improved over the past five years, but it has…a great sign of its economic moat. Management and financial health scores are also very strong.

We do see upside right now limited in the company's value, but we want to definitely pick up shares on any dip. We believe that the company has the least downside risk. Upside potential is probably not as strong as some other high growth companies, but we believe it has the most solid mix of financial stability, upside, and dividend in the industry.

The only place it ranked a bit lower was value, which would improve on a dip in the company's price. The company has improved share price over 20% in the past two months and is due for correction.

Disclosure: I am long TSLA.

Source: Outlook And Price Targets On Automotive Stocks (Part 1)