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Should you buy Toyota shares as it targets the US EV market with a $3.4 billion investment?

on Oct 18, 2021
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  • Toyota is investing $3.4 billion in the US automotive battery market.
  • The investment is part of a global layout of $13.5 billion invested in battery production projects.
  • The Japanese automaker targets US production by 2025.

Toyota Motor Corp (LON:TYT) announced a $3.4 billion investment in the US automotive battery production market as it eyes the rapidly growing EV industry. The investment is part of the global layout of about $13.5 billion, with Toyota North America targeting US production by 2025.

The US investments will have an initial layout of about $1.29 billion through 2031 and will create approximately 1,750 new American jobs. The company targets long-term goals for electrification, resulting in the sustainability of the environment.

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Ted Ogawa, Chief Executive Officer, Toyota Motor North America said:

This investment will help usher in more affordable electrified vehicles for U.S. consumers, significantly reduce carbon emissions, and importantly, create even more American jobs tied to the future of mobility.

Toyota looks significantly undervalued

From an investment perspective, Toyota shares trade at a compelling trailing 12-month and forward P/E ratios of 9.51 and 7.03, respectively. Therefore, value investors could find Toyota as an exciting option for their portfolios.

Moreover, analysts expect its earnings per share to grow by 10.40% this year before growing at an average annual rate of nearly 28% over the next five years. As a result, the stock could also gain the attention of growth investors.

Therefore, given Toyota’s ambitious global commitment to electrification, the company offers exciting growth prospects at compelling valuation multiples. 

Source – TradingView

Technically, Toyota shares seem to be trading within a gently ascending channel formation in the intraday chart. However, the stock is yet to reach overbought conditions after a recent rebound.

Therefore, investors could target extended gains above the 100-day moving average at $181.17, or higher at $186.71, while $170.87 and $165.37 are crucial support zones.

It is not too late to buy Toyota shares

In summary, although Toyota shares have bounced recently to trade just below the 100-day MA, the stock is yet to reach overbought conditions, leaving room for more upward movements.

Therefore, it may not be too late to invest in Toyota stock.