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The Panic-Proof Portfolio (Stockchase Research) Honda Motor Ltd. HMC-N TOP PICK Aug 26, 2021

Stockchase Research Editor: Michael O'Reilly We reiterate our TOP PICK with HMC. The $56 billion market cap automaker trades at good value, is seeing a good rebound in sales and pays a good dividend, backed by a payout ratio under 45% of cash flow. Recently reported EPS of $1.18 beat expectations of $0.74. It trades at 6x earnings and is below book value. We would buy this with a stop loss at $26.50 looking to achieve $38.50 -- upside potential over 28%. Yield 3.39% (Analysts’ price target is $38.51)

The Panic-Proof Portfolio (Stockchase Research)

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$29.525

Stock price when the opinion was issued

Automotive

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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK

Stockchase Research Editor: Michael O'Reilly We again reiterate HMC as a TOP PICK. Its US auto sales increased over 8% in 2021 despite the well known computer chip shortages - compared to Ford that saw a 6% decline. Only Toyota out did Honda for US sales. The company trades at good value (7x earnings compared to peers at 15x). Recently reported earnings beat analyst expectations by 18% and it trades below book value. We continue to recommend a stop loss at $26.50 looking to achieve $38 -- upside potential over 24%. Yield 2.55% (Analysts’ price target is $37.62)

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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK

(A Top Pick Aug 26/21, Up 4.5%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with HMC is progressing well. We now recommend trailing up the stop (from $26.50) to $29.00.

premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK

(A Top Pick Jan 11/22, Down 4.2%)Stockchase Research Editor: Michael O’Reilly Our PAST TOP PICK with HMC has triggered its stop at $29. To remain disciplined, we recommend covering the position at this time.

premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK

Stockchase Research Editor: Michael O'Reilly With a good valuation and newly formed partnership, we select HMC as a TOP PICK. HMC and SONY have partnered and are expected to roll out a series of electric vehicles in the next year ready for retail by 2025. It trades at 7x earnings, compared to peers at 29x and is trading under book value. Recently released earnings beat analyst expectations by over 50% and the company is aggressively retiring debt and buying back stock, while still growing cash reserves. Its dividend can be sporatic, so the high yield should be taken with caution. We recommend a stop loss at $21, looking to achieve $30.50 - upside over 20%. Yield 6.49% (Analysts’ price target is $30.30)

premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK

Stockchase Research Editor: Michael O'Reilly We reiterate HMC as a TOP PICK. Its partnership with SONY is expected to roll out a series of electric vehicles in the next year ready for retail by 2025. It trades at 7x earnings, compared to peers at 29x and is trading under book value. Recently released earnings showed a build of over $900 million in cash reserves, while retiring over $300 million in debt and purchasing back $60 million worth of shares. We recommend trailing up the stop loss from ($21) to $23, looking to achieve $31.50 - upside over 22%. Yield 3.89% (Analysts’ price target is $31.51)

premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK

(A Top Pick Jul 28/22, Down 10.8%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with HMC has triggered its stop $23. To remain disciplined, we recommend covering the position at this time. When combined with the previous buy recommendation, this will result in net investment loss of 8%.

BUY ON WEAKNESS

Believes Japanese quality is excellent.
Bullish on the company for the long term.
Investors must be willing to hold shares for long term (5-10 years).
Will see upside in electronic vehicles.

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It's a Monthly Gems opinion which is available only for Premium members

Curated by Allan Tong since 2019.
99+ opinions with 4.15 rating.

TOP PICK

Ford, GM and, of course, Tesla, attract all the attention, but this Japanese carmaker could outpace them. Trading in New York, Honda has just partnered with Sony to produce EV's by 2025. It's a belated move into electric cars, but promising, given the prowess of Sony in electronics and Honda's track record as a successful gas automaker. Each company will invest five billion Yen (US$37 million). Meanwhile, Honda will launch two EV's in partnership with GM in 2024.

BUY

A dividend pick for 2025. Is down a lot from their highs. A contrarian play. It pays around a 5% dividend yield. It trades at a reasonable valuation and offers decent earnings growth in 2025 of 5-7%. Collect the dividend and enjoy a little capital appreciation on top. You won't shoot the lights out, but you can relax with this steady earner. Honda has 50% of their market cap as cash on the balance sheet. The Nissan merger sounds fantastic.

PARTIAL BUY

Autos are the hardest sector to analyze on tariffs. Chart shows that it's gone nowhere for a long time; the high was back in 2011, then dead money. The low from 2022 is ~$22. If you're interested, buy a half position right now. Then watch. If you own it, certainly don't sell; we've seen this ride with Honda before.

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