The WSJ's "Ahead of the Tape" column out saying that sweet deals by Honda (HMC) and Toyota (TM) may leave big three in dust. A weak yen means Japanese auto makers are as well-armed as ever to steal mkt share from the Big Three. Honda and Toyota have tried not to play the incentive game the past few years, content to watch General Motors (GM), Ford (F) and DaimlerChrysler (DCX) eat away at their own profit margins by showering US consumers with 0% financing deals and cash giveaways. But the Japanese are using incentives more aggressively now, at a time when the Big Three have little ammunition left for a price war. US auto makers held the line or decreased incentives in June, compared with a year earlier, while the top two Japanese players increased deals by as much as $627 per vehicle sold. Toyota is offering cheap financing on big trucks, a segment dominated by the Big Three. Honda has nearly doubled incentives in June to $1,400 a vehicle compared with Jun'06. The Japanese enjoy a huge labor-cost advantage over the Big Three, which gives them room to push incentives. Meantime, the yen's weakness means Honda and Toyota can ship parts and vehicles from Japan cheaply to the US, further holding down their costs as they cut prices. Incentives mean June auto sales, which are reported by the auto makers today, probably showed vigor. Analysts believe domestic sales of cars and light trucks hit an annual rate between 16.4m and 16.8m in June, up as much as 5% from a year ago. It also means the Big Three continued to lose mkt share.
"Heard on the Street" column discusses General Motors (GM), saying that it has been quite a ride for GM over the past few weeks. Since June 7, the auto maker's stock has zoomed ahead 28% on increasing optimism that GM and its Detroit rivals will haul away a truckload of concessions from this summer's contract talks with the UAW. While the possibility of a transformational deal with the union has made GM shares attractive as a near-term trading play, investors looking down the road should still proceed with caution. Fundamentally, GM's business is still under stress. It is burning cash, its core N-American operations aren't making money and several broad industry trends are combining to damp its ability to boost rev, which it needs to fuel its turnaround. "The longer-term story remains highly challenged," says Peter Nesvold, of Bear Stearns.
Barron's Online "Inside Scoop" section report that Lone Pine Capital has found a snug fit in shares of Under Armour (UA). The $8bn hedge fund led by Stephen Mandel Jr. disclosed a 7.8% stake in Under Armour shares in a late Fri. Lone Pine and affiliated funds now own 2.7 million shares of class A shares. The stake makes the firm Under Armour's second-largest institutional holder. Wall St. analysts overall are bullish on Under Armour's prospects. On avg, 14 firms rank the stock a Buy.
"Heard on the Street" column discusses General Motors (GM), saying that it has been quite a ride for GM over the past few weeks. Since June 7, the auto maker's stock has zoomed ahead 28% on increasing optimism that GM and its Detroit rivals will haul away a truckload of concessions from this summer's contract talks with the UAW. While the possibility of a transformational deal with the union has made GM shares attractive as a near-term trading play, investors looking down the road should still proceed with caution. Fundamentally, GM's business is still under stress. It is burning cash, its core N-American operations aren't making money and several broad industry trends are combining to damp its ability to boost rev, which it needs to fuel its turnaround. "The longer-term story remains highly challenged," says Peter Nesvold, of Bear Stearns.
Barron's Online "Inside Scoop" section report that Lone Pine Capital has found a snug fit in shares of Under Armour (UA). The $8bn hedge fund led by Stephen Mandel Jr. disclosed a 7.8% stake in Under Armour shares in a late Fri. Lone Pine and affiliated funds now own 2.7 million shares of class A shares. The stake makes the firm Under Armour's second-largest institutional holder. Wall St. analysts overall are bullish on Under Armour's prospects. On avg, 14 firms rank the stock a Buy.
the current technicals have me covering part of my UA but I do think the stock will run into resistance as it is richly valued, in an industry that is under pressure, and has significant competition.
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