The Goodyear Tire & Rubber Company (GT): A Good Year for This Stock?

Page 1 of 2
The Goodyear Tire & Rubber Company (NASDAQ:GT) is poised to have a great year. The Goodyear Tire & Rubber Company (NASDAQ:GT) saw its stock jump some 16% over the last month, and I believe there is still room for the stock to move higher.
Higher demand for tires should be driven by an improving U.S. and global economy, which will promote an increase in miles driven and only further add to the pent-up demand for replacement parts.

The Goodyear Tire & Rubber Company (NASDAQ:GT)
Another positive is that The Goodyear Tire & Rubber Company (NASDAQ:GT) generates sales globally, but its key market is North America, making up 50% of revenue. One of the key drivers will be higher demand in emerging markets of Latin America, Eastern Europe and Asia.

About 70% of The Goodyear Tire & Rubber Company (NASDAQ:GT)’s tire units are targeted at the replacement market and 30% for original-equipment manufacturers (OEMs). The nice thing about this is that margins on replacement tires are typically higher than for original equipment tires.

Goodyear has also managed to extend its debt maturities, with no funded debt maturities until 2014, and no long-term debt due until 2016. Billionaire David Tepper is one of The Goodyear Tire & Rubber Company (NASDAQ:GT)’s largest hedge fund shareholders (check out Tepper’s top picks).

Competitive landscape

Two of The Goodyear Tire & Rubber Company (NASDAQ:GT)’s major competitors include Bridgestone and Michelin. These three companies account for about 55% of the global market. Meanwhile, its other significant competitor includes Cooper Tire & Rubber Company (NYSE:CTB) Cooper saw revenue decline 2% in 2012, thanks to lower volume, but the tire company managed to post EPS of $0.87 compared to $0.34 for the same quarter last year and well above consensus forecasts of $0.69. Part of Cooper’s big initiative is higher production related to its 51% ownership of Cooper Chengshan in China.

Cooper Tire & Rubber Company (NYSE:CTB) has a market share of only 15% in light-vehicle replacement tires in the U.S. The likes of Goodyear and Bridgestone are substantially larger and serve not only the replacement tire market, but also the original-equipment manufacturers. Cooper Tire & Rubber Company (NYSE:CTB) does appear to be rather cheap. The stock trades at just over 6 times earnings, compared to its five year P/E range of 6 times to 26 times.
Automakers

Helping promote higher demand for tires will be higher production by car manufacturers, including General Motors Company (NYSE:GM) and Ford Motor Company (NYSE:F). GM is expected to see robust demand over the interim. General Motors Company (NYSE:GM) posted first-quarter EPS of $0.67 compared to the $0.93 for the same quarter last year, with the fall due to lower-than-expected North American production. However, GM has been shrinking its North American production footprint and cost structure to help boost profitability. Also, the company plans to focus on fewer brands and new production.

General Motors Company (NYSE:GM) had more hedge fund interest than Ford Motor Company (NYSE:F), with 110 hedge funds long the stock. Billionaire Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) has the most valuable position in the stock, worth $695 million (check out Buffett’s cheap stock picks).

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!