The Monthly Gems by Allan Tong Honda Motor Ltd. HMC-N TOP PICK Aug 02, 2022

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)

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)

(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.

(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.

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)

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)

(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%.