Indian car manufacturer Tata Motors (
TTM
,
quote
) is moving towards a new 52-week high in New York trading early
this week. Is now the time to jump into this emerging automobile
company?
Tata Motors is perhaps best known for its innovative
Nano car
, which has attempted to attract customers only recently
moved up into the middle class who can now afford a small car
instead of a motorbike.
Unfortunately, the Nano was not as successful as had been
anticipated, which somewhat weighed on the stock. While the Nano
is actually
showing signs of improvement
in terms of sales, Tata Motors' diverse holdings means that there
are plenty of reasons to be involved in the name that don't
revolve around the micro-car.
Tata Motors is involved in the making of heavy vehicles like
trucks,
including cheaper models
that will appeal to emerging market customers. As well, the
company has entered into agreements with governments like
Malaysia to
sell armored troop carriers
.
Even more compelling is Tata Motors' interests in the luxury
segment of the automobile industry. Although its leveraged buyout
of Jaguar Land Rover was ill-timed -- they bought the company at
the height of the equity boom and left Tata Motors in a difficult
situation credit timed -- they have turned the previously
struggling British high-end car maker into a very profitable
venture. In particular, the car company is poised to take
advantage of the Chinese luxury market.
Not only did Land Rover and Jaguar sales increase 60% in China
in 2011, Tata Motors has entered into a deal with Chinese outfit
Cherry Automobile to create high-end automobiles for the Chinese
market.
Because of its diversified holdings
, as
Forbes
claims, the company makes a great proxy on global growth. Tata
Motors also allows investors to gain exposure to multiple
emerging markets such as India, without being particularly
susceptible to the more
troubling elements of the macroeconomic environment in
India
(
EPI
,
quote
) .
Trading at a very reasonable 10.7 times trailing earnings and
roughly 7 times forward earnings, the stock still looks
relatively inexpensive here, even though it has effectively
doubled since November.
Disclosure: Author may start a position in TTM within the
next 72 hours
