Honda Motor Company (HMC) is one of our 7 favorite value stocks for the year ahead. Having a Value rating of A is a good start, but only part of the story. Let’s start at the beginning to spell it all out.
Honda was originally a motorcycle manufacturer. Now they make everything from motorcycles to automobiles, power products such as boat engines, generators, and lawnmowers. It they also makes robots and private jets and is currently Japan's third-largest automaker by sales and has the highest exposure to North America out of Japan's big three.
Honda's brand and its reputation for quality have certainly helped drive demand for its models. HMC has also been historically known for fuel-efficient cars, which has positioned it to take advantage of the massive consumer demand for more fuel-efficient vehicles.
The popularity of its vehicles has also allowed it to use fewer incentives than other automakers, boosting its profits and improving its cars' resale value. Like most automakers these days, the company is investing in electric vehicles with its Honda 2030 Vision. It should also benefit from a rebound in auto production as the chip shortage eases.
Now let’s get down to why you are really reading this article. To appreciate the tremendous value story at play.
HMC is one of the top stocks according to the POWR Rating with an A or Strong Buy. Stocks with that rating have beaten the S&P 500 by more than 4X since 1999.
On top of that we have a Value rating of A thanks in large part by a rock-bottom P/E of 9. On top of that you have a very attractive 3.9% dividend yield. This makes for a winning combo, and a major reason that Wall Street analysts expect HMC to greatly outperform in the year ahead.
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HMC shares were trading at $24.07 per share on Thursday morning, down $0.02 (-0.08%). Year-to-date, HMC has gained 5.29%, versus a 4.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.
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