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What GM was back in the 1950s, Toyota (TM) is today. Keeping it out of an auto-oriented portfolio is as brain dead as keeping Apple (AAPL) out of a tech portfolio.

At its current price of $80.24, TM sells at a PE of 17.24. That's higher than Apple's 16.29. And there is good reason for that. Despite a much lower base, GM has not quite kept pace with TM this year, its recent momentum carrying it to a 20.28% gain while TM is up 21.35%. Ford (F), by contrast, is down slightly for the year.

How can this be? You won't find it in the financials, where sales rise-and-fall with the seasons and margins remain Wal-Mart (WMT) like. Where you will find it is in credibility.

Toyota managed to survive last year's massive earthquake and keep rolling. It absolutely dominates in hybrids, and has made that technology mainstream in Japan. It plans to unveil 21 new Prius models over the next two years, while its American rivals only have a few among them.

Hybrids don't yet pack the profit punch of gas-powered vehicles, Toyota officials admit, but that revelation is part of the company's charm. It's honest about what is not working. It's not a personality-driven company, and its ads are, in a word, blech. It just goes about its business.

The biggest worry for the stock is China. That's not a worry about production, despite its brief shut-down of a factory over a dispute with China concerning islands in the South China Sea that might have oil beneath them. The issue is demand. Toyota is not seeing big growth in China, which represents barely one-tenth of its total sales. And remember - despite all the saber-rattling, China and Japan recently agreed to conduct trade directly in yen and yuan.

As I say, you can't have an auto portfolio without Toyota, despite its high price. Because you can't have a more honest company in your portfolio than Toyota, nor a more stable business.

When might that change? Not until other companies learn the trick of relying on systems rather than people for growth.

Source: Toyota Remains The World's Best Run Car Company