So what's up with TM?

I received my first email inquiry yesterday and was unabashedly excited about it. Somehow, the thought of at least one person even reading this blog makes me happy.

Anyway, the question was about good ol' Toyota (NYSE: TM) and whether it is now a good time to buy it. The person who sent the question was a bit nervous about buying in too early before another dip in the stock's price. Every investor deals with this fear each time s/he places a trade order. However, as individual investors we must rely on our own research to make informed decisions so that we can sleep better at night.

So how DOES one determine whether it is a good time to buy TM? Well, one thing I learned quickly about the markets is that you shouldn't try to time actions perfectly. It will drive you bonkers. With that in mind, however, I read a bunch of recent research reports published since Toyota's President apologized for the massive recall on February 5th.

Here's my findings re TM's financial "health:"
- The official recall of 4 models will not heavily impact TM's earnings. There will be a massive amount of lawsuits to come, but not enough to cause major concern for the car company provided it works on regaining customer loyalty/trust immediately.
- TM has a small debt load and lots of cash, which is pretty darn helpful in this environment.
- 3rd quarter results showed 10% increase in revenues as well as some reduction in costs, another positive in my book.
- Fiscal year 2010 won't be as pretty as years past, but that is not unusual in this economy
- Expansion into emerging markets like Brazil and Russia should help ease the pain of a harsh decline in demand in the US

From a quick and dirty look at Toyota's financial status, the company sounds like it will be more than fine despite the recalls. Buying TM stock over the next few weeks is a good idea in my book. However, as an investor I would proceed with caution and try to wait and see if I could purchase Toyota around the mid $60s or low $70s range.

I am a big fan of Limit orders and would certainly put one on for TM at several price levels. By some conservative estimates, the 12 month stock price estimate is low $80s. Others have pointed out that it can reach its old $90s handle prior to the recall woes and even top out around the $110s. I now have TM on my own watchlist and hope to buy the stock on a down day(s).

Think long and hard whether you are willing to hold TM stock for the short or long term. Always do more research to help you make informed decisions since knowledge is power (so cliche, I know, but I couldn't help that one).

So, will you be watching TM more closely now?

Disclaimer: Please remember to speak to your own licensed financial advisor. I am just a person willing to share my thoughts about investing with internet strangers. Do your research, and then turn around and do some more. This blog is purely for discussion purposes :-)