Tata Motors is Right on Track
Josef Ray is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Stocks in emerging markets have been the stuff of financial legends. They can either be a boon or a bane depending on who you talk to, and can either add a fortune to your income or drag down a portfolio that isn’t diversified enough. In the case of India’s largest manufacturer of automobiles, which is the case? Tata Motors (NYSE: TTM) isn’t a company that has a lot of name recall, although it has piqued the interest of investors worldwide. So, should you buy Tata?
Getting to Know Tata Motors
For the uninitiated, Tata Motors is a Mumbai-based company that started out as a locomotive manufacturer. Nine years after inception, it collaborated with Daimler-Benz AG and started its foray into car manufacturing, even after both parted ways in 1969. Since then, Tata Motors has sold more than 6.5 million vehicles in India, and it is now the 18th largest automaker in the world. In addition to five Indian manufacturing plants, the company also has manufacturing facilities in Argentina, Thailand, the UK, and South Africa, and has plans to further their production in locations in other parts of the globe.
How is Tata Standing in the Market
For Jan. 10, Tata closed at $30.66, an increase of $0.20, or 0.66%, from the previous day. The past four weeks saw considerable growth for Tata’s stock price, from below $26 to slightly above thirty. The fifty-two-week price range isn’t something to sneeze at, either, as Tata grew from a low of $18.83 and hit a high of $30.85. Not bad for a relative unknown.
The past few years have seen Tata Motors make impressive acquisitions, which may be much more well-known to many. Korean vehicle maker Daewoo had a truck manufacturing section which was purchased by the company in ’04, but it is ultimately the purchase of the Land Rover brand from Ford (NYSE: F) during the financial crisis in 2008. So what’s the asking price for the iconic Jaguar sub-brand of vehicles? A cool $2.3 billion, which has certainly helped Ford in the years that followed.
Acquisitions and Competition
The loss of the Rover name may have been monumental to Ford, as it was one of the flag-carriers of the Jaguar luxury brand, but the company itself seems to be keeping its head above water. Jan. 10 saw it close at $13.83, with a whopping 2.67% increase of $0.36. The past four weeks saw the price rise from about $11.50 to where it is today. The reports of the company hiring over 2,000 salaried workers to help step up production and R&D is fortunate for Ford and investors as well. Global sales are forecasted to increase by almost 5 million through the coming several years, to a point where sales expectations are pegged at an impressive 21 million yearly come 2017, based on figures such as their third-quarter profits of $1.6 billion for 2012 and announcements of doubled dividends.
Erstwhile partner Daimler AG (NASDAQOTH: DDAIF) is having a good month, as it closed at $56.99, an increase of a substantial 2.32%, or an additional $1.29, for Jan. 10. This is, no doubt, driven by its planned campaign to focus on the US market as sales in China and Europe tail off, and reports that Daimler is expected to hit record-breaking sales in the States this year, following the trend of a twelve-percent growth in the country for the previous year. However, the former 10% target profit margin for the company’s MB car division is under review, amidst reduced product demand and higher price pressure that contributed to not meeting the set target. Said car division comprises the Maybach, Smart, and Mercedes-Benz brands.
Final Take on Tata Motors
As an obscure yet up and coming brand, Tata doesn’t look like it’s pulling the brakes anytime soon. Investments in the Jaguar division are set at another $2.37 for product and technology developments per year, plus an additional $158 million for the China manufacturing plant. These tactics are pushing the company towards becoming the largest Land Rover seller outside Europe, which also comes with a sales advantage due to faltering sales in the US and other territories. Plans are also in the works for one more plant in Brazil, which should persuade traders to buy and hold.
JosefRayDagatan has no position in any stocks mentioned. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!