The worldwide transition from internal combustion engine powered to electrically powered vehicles is well underway, suggests Neil Macneale, editor of 2-for-1 Stock Split Newsletter.
Toyota Motor Corp. (TM) — a favorite conservative idea for 2022 — has recently announced it is raising its investment in electric vehicles and doubling the number of electric vehicle (EV) models it plans to release by 2030, a bold move that could positively affect its green credentials in the long term.
Toyota said it aims to sell 3.5 million EVs a year globally by 2030, as part of its plan to build momentum in its push to reduce carbon emissions. Toyota also said it would launch 30 new EV models globally by 2030.
With this announcement, the world's second largest car manufacturer — by sales — doubles its number of new planned EV models. The previous plan proposed 15 models by 2025.
It should be remembered that Toyota came out with the Prius hybrid over 20 years ago; long before the auto industry even paid lip service to becoming more environmentally responsible.
The Prius broke new ground in the engineering of hybrid drive trains and is an example of the cutting-edge technology Toyota brings to the table. Beyond hybrids, plug-ins, and all-electrics, Toyota already has a jump on the industry in the development of hydrogen powered fuel cells to eventually replace the batteries in our electric vehicles.
Toyota is the world's second largest car company after Volkswagen (VWAGY). Toyota Motors announced a 5-for-1 split in Japan back in May, 2021. TM has solid numbers — good price-to-earnings and price-to-book ratios, a dependable 3.5% dividend, and a very low Beta.
Compared to Ford (F) and General Motors (GM), Toyota has a stronger balance sheet, is more profitable, and is less volatile. Toyota has almost all the characteristics I look for in our 2 for 1 Index stocks.
TM trades on the NYSE utilizing the mechanism of American Depositary Receipts (ADRs). Mellon Bank of New York handles the ADRs for Toyota and put out an announcement on 9/3/21 that it was adjusting its ratio of TM common stock from 1 ADR to 2 ordinary shares to 1 ADR to 10 ordinary shares.
In other words, traders in Japan would see a 5 for 1 split of TM's shares, while traders in the USA would see no change at all in the price or number of ADRs in their account. It was probably for this reason that little to no attention was paid to Toyota's 5 to 1 split in the USA.
However, the motivation for TM's board of directors to split the shares in Japan would be the same as that for any American board of directors. The signal provided by the split in Japan, and the lack of a market reaction, leads us to believe the market is not fully appreciative of the probable outperformance of TM over the next few years.
