Goodyear Tire (GT)

Not a fan of the tire industry. Doesn’t really care for the dynamics. It has a great deal of trouble passing through raw material costs. The collapse of oil prices has been a benefit, but it is going to be very difficult to repeat a decline in oil. He believes the company is very involved in OEM tires. This works by them selling the tires at cost with the car. They are then looking to get the replacement tire business. That is a terrible dynamic.

(Market Call Minute.) The tire industry is undergoing some significant change, but this company seems to be rightly poised for it. They are building a world-class factory in Mexico.

This has a low P/E ratio because it is a cyclical stock. It has benefited from the price of oil. Its biggest raw material in making tires is oil. Also, you use tires to drive and as the price of gasoline goes down, miles driven goes up so the replacement of tires goes up. This will probably continue to do well.

Had a pretty good run and the outlook in the long-term is good. He would look to add on a pull back. If you own, consider taking a little bit of profit and buy it back on a pull back.

Goodyear is tied into new car sales, and miles driven (need replacement tires more often in a good economy). As the economy increases it will be good for Goodyear as well.

Doesn’t follow this one closely but it is benefiting from a resurgence in the automotive industry in general. One of the concerns would be input prices although with oil coming down and the positive outlook on automotive and trucking, this could be an interesting play.