Should you invest in Toyota shares in December?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Dec 6, 2020
  • Toyota announced that it's annual global sales of electrified vehicles could reach 5.5M by 2025
  • The company raised its global sales forecast to 9.4 million vehicles for the fiscal year 2021
  • Toyota has introduced the application of its PROACE electric vehicles

Toyota (NYSE: TM) shares have found strong support above the $130 level, but the price cant still surpasses the $140 resistance. In November, Toyota sales in the U.S fell only 1%, and the company raised its global sales forecast to 9.4 million vehicles.

Fundamental analysis: Toyota sales in the U.S fell only 1% in November

Toyota is the largest automobile manufacturer in Japan and the second-largest in the world behind Volkswagen. The company is the global market leader in sales of hybrid electric vehicles, and Toyota hybrids are heavily promoted in global markets.

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According to the latest news, Toyota has introduced the application of its PROACE electric vehicles to include passenger and light commercial vehicles. The new versions of the PROACE series will occur in February 2021 and the company will provide an eight-year/160,000 km warranty for the batteries.

Even in this pandemic environment, the business of Toyota is going well. Toyota announced that its annual global sales of electrified vehicles could reach 5.5M by 2025, and the company raised its global sales forecast to 9.4 million vehicles for the fiscal year 2021.

“Auto electrification was progressing faster than expected and the timeline to reach that level of electrified sales (hybrid, plug-in hybrid, electric, hydrogen fuel cell) is five years earlier than initially planned,” said Seiya Nakao, chairman, and president of Toyota.

In the U.S, Toyota sales fell only 1% in November to 205,764 vehicles, which is above expectations. Truck sales were down 0.4% Y/Y to 139,825 units, but the company recorded a 48% gain in hybrid sales to 33,665 units in the U.S.

The positive news is that auto sales in China rose 12.5% in October, which is the fourth straight monthly gain in the world’s largest car market.

The fundamentals of this company are excellent, the company has increased its global sales forecast, and the dividend remains safe. With the market capitalization of $193B, this stock is still undervalued relative to the other automobile manufacturers, and maybe now could be a good time to invest in Toyota shares.

Technical analysis: The current uptrend remains intact

Data source: tradingview.com

Toyota shares have been moving in an uptrend last several months, and for now, there is no signal of the trend reversal. The important support levels are $130 and $120; $ 140, $145, and $150 represent the resistance levels.

If the price jumps above $140, it would be a signal to buy Toyota shares, but if the price falls below $120, it would be a strong “sell” signal, and the next target could be around $100. If the price drops in the upcoming months, every price in a range from $120 – $100 could be a good opportunity for buying Toyota shares.

Summary

Toyota shares could be a good investment option, and most financial analysts are also expecting its price to rise considerably in the upcoming years. The company raised its global sales forecast to 9.4 million vehicles for the fiscal year 2021 and with the market capitalization of $193B this stock is still undervalued relative to the other automobile manufacturers. If the price jumps above $140 this December, it would be a “buy” signal, but if the price falls below $120, it would be a strong “sell” signal, and the next target could be around $100.

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