fbpx

Subaru Stock

Dear Mr. Berko: It’s good to see your column back again in a South Florida publication. Two years ago, we bought a Subaru Outback crossover. We liked it so much that we bought a Subaru Forester as a second car late last year. I’d like to buy Subaru stock, but I can’t find it listed anywhere. Where can I find it? And please tell me whether you think the stock is worth buying. — NE, Fort Lauderdale, Fla.

Dear NE: You’re looking in all the wrong places. Though you probably know that the demand for Subaru’s Outback and Forester models is so strong that Subaru is in the process of expanding its American plant to produce another 100,000 vehicles by the spring of 2017, you probably didn’t know that when spelled backward, “Subaru” is pronounced “you are a bus.”

Subaru (the Japanese name for the Pleiades star cluster, or the Seven Sisters) is the automobile manufacturing division of Fuji Heavy Industries (FUJHY-$18). The company is the 18th-largest automaker (by production) in the world. Subaru is different from its Japanese competitors in that 75 percent of its cars and parts are still made in Japan. Its only overseas manufacturing facility — which is in Lafayette, Indiana — is currently in the process of trying to handle record demand. Owning shares of parent Fuji Heavy Industries is the only way to own shares of Subaru. Fuji should earn $2.54 a share this year, and its 70-cent dividend yields 3.8 percent.

Fuji Heavy Industries is a $31.6 billion-revenue company with a very impressive 13.3 percent net profit margin, which is 2 1/2 times better than Ford’s and General Motors’. Frankly, if Ford and GM were managed as well as FUJHY, those issues might be trading at twice their current prices. This year, Subaru may sell over 1 million vehicles, which would account for 92 percent of FUJHY’s 2016 revenues. FUJHY employs 31,000 workers to manufacture and sell automobiles and their various parts. The remaining $3 billion of revenue is derived from the sale of aerospace-related machinery and components, agricultural machinery and components, and construction machinery and components.

Subaru’s product line is intentionally limited, and management focuses on building safe, fuel-efficient, reliable all-wheel-drive vehicles. Demand is booming, and Subaru is on track to having its seventh consecutive record sales year in the U.S. However, record sales are made easier by anything-goes financing. Dealers are super eager to sell cars, and the banks are extra eager to lend money so that together they can get pet pigs approved for seven-year no-money-down loans.

Though Subaru is earning record revenues in the U.S., the story isn’t so positive in the rest of the world. Sales in Japan are off 3 percent from a year ago, and revenues from China and Europe remain flat. As a result, the price of FUJHY shares has fallen 66 points in the past dozen months. Despite all that, Thomson Reuters, Charles Schwab and Credit Suisse have “buy” ratings on the stock and the price talk of $21-$24 in the next dozen months.

Whereas Ford and GM will probably post lower revenues in 2017, the consensus is that Subaru could have an eighth consecutive record sales year in the U.S. And helping next year to be another record year will be the Subaru Impreza, a compact sedan to be built at the expanded Lafayette plant on a new global platform. Next year should be a good year for FUJHY, and there’s a possibility that FUJHY’s superb management team will increase the dividend.

According to Market Watch, there are 17 brokerages following FUJHY. Nine have “buy” ratings. Two have “overweight” ratings. Five brokerages rate FUJHY a “hold.” And one brokerage recommends that investors “sell.” I’d buy the cars because of their impressive reputation for quality. But my gut tells me not to buy the stock. Something doesn’t feel right to me.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
COPYRIGHT 2016 CREATORS.COM

You May Also Like

Fort Lauderdale International Film Festival Hosts Oscars Watch Party

Space is limited and advance purchase of tickets is required.

Desai Foundation Hosts Holi Celebration in Miami

The aim is to raise awareness and support for health, livelihood, and menstrual equity programs in India.

Set Sail for Fun: Inaugural Red Shield Regatta Launches in March

The evening will be hosted by Captain Lee Rosbach of Bravo TV’s Below Deck.

Editor’s Letter: A Heartfelt Return

If you are a longtime SFBW reader and are wondering what the heck I am doing back here with an editor’s column, well there’s a story behind that. It was

Kevin Gale

Other Posts

Screen Gems

“The Price for Freedom,” a chronicle about Harry T. and Harriette V. Moore, will begin pre-production of the monumental civil rights story in the Fort Lauderdale area.

Chef Aarón Sánchez Prepares to Shine at Visit Lauderdale Food & Wine Festival

We spoke with Sánchez about current culinary trends, food festivals, and his own approach to cooking.

American Heritage Schools Hosts Virtual Job Fair for Teachers

Educators around the U.S. are invited to attend.

Editor’s Letter: A Man of Nearly Unlimited Interests

Kevin Kaminski, Lifestyle Group Editor, was an honor to the profession of journalism.

Drew Limsky

Drew Limsky

Editor-in-Chief

BIOGRAPHY

Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.