Buy on dips!

The market seems to be running out of steam, and with a mixture of good and bad signals, traders seem to have chosen to take some profits off the table.

US markets lost 2-4% last night, and Asian markets are currently on the downtrend. As reasoned in my previous article, I believe there are more downside, however there are several stocks which have reached reasonable prices, and you may want to nibble a little.

One particular stock that I like is Toyota Motor (TSE). I have especially waited for its Sep sales results to be announced (and I expected it to be poor, or at least a drop from Aug), after the US cash for clunkers program in Aug. It has dropped from around 4100 to 3380 within 2 months, and historical prices have been an average of 5000-8000 plus. Its tangible book value is around 3208, which means it is pretty near its book value. March lows is around 2500.

Though Toyota is bleeding now, but one thing to note is Toyota is the number 1 automobile company in terms of global sales, it has the highest sales in US (exceeded GM), and it owns the most popular electric hybrid car, Prius.

Automobile industry is subjected to cycles, and though I do not expect Toyota to bounce back very soon, it will be back eventually. Being also a dividend stock (around 2-4%), my view is this is a stock to hold for long-term, for both dividend and capital gains.

Thus I have issued a buy call for Toyota Motor, at a buy price of 3380 yen. Good luck!