Toyota Motor Corp. (NYSE:TM) — For our Stocks to Sell in March, I said, “Production problems related to natural catastrophes continue. Analysts look for earnings to be limited by margin pressures, customer quality concerns and a stronger yen.”
Since then, Toyota stock fell from a high of $87.15 in April to a low of $72.56 in July. However, on Monday, Toyota reported an increase in profits of $3.28 billion ($1.04 per share) for its fiscal second quarter. The company raised its outlook for the fiscal year ending March 31, 2013, to $3.09 per share. Most analysts that follow TM raised their estimates as well, and changed their overall rating to a “buy.”
Technically, TM broke through its 50-day and 200-day moving averages on a high-volume price gap. Accumulation has been high since October, and this break confirms that the stock is back on track.
After a positive reaction to earnings, stocks will often succumb to profit-taking, and so long-term investors should plan to buy the stock under $80.