General Motors Company (GM), Ford Motor Company (F): Who’s a Buy and Who’s Not?

If trouble brews on the horizon, Toyota is far better prepared to weather it than the two Detroit automakers–if the market crashed, I’d rather have my money in Toyota Motor Corporation (ADR) (NYSE:TM) than Ford or GM.

Tangible book value per share

Tangible Book Value Per Share (TBVPS) measures what portion of a company’s tangible assets can be attributed to each share of its common stock. This is generally used as a measurement of how undervalued or overvalued a stock is. A company’s tangible assets are what would be left over if a company had to liquidate. Therefore, if the TBVPS is greater than the current share price, the stock might be undervalued, and vice versa.

So far, we’ve looked at efficiency and potential to grow. The valuation of a stock should provide us with one more decisive piece of the puzzle. Below are the TBVPS’s and current common stock share prices of Ford Motor Company (NYSE:F), GM, and Toyota:

F Tangible Book Value Per Share data by YCharts

F data by YCharts

Currently, none of these stocks are potentially undervalued. Rather, they are all potentially overvalued. By this metric, Toyota is the least potentially overvalued, and thus the safest.

Foolish conclusions

When choosing which stocks to put in your portfolio, there are obviously many more considerations than these indicators. However, these are 3 less-common indicators that I feel provide an insight into a company’s ability to grow and protect itself from disaster.

Of the three metrics that I evaluated, Toyota was the “winner” of two. I feel that Toyota’s potential both in existent and expanding markets, as well as its cash flow advantage, should enable it to show aggressive growth in the mid and long term. Of the three companies that I evaluated, I feel the most strongly about Toyota.

This is no knock on Ford and GM, however. Since GM’s recovery from Chapter 11, it has been incredibly efficient with its assets, and this should help the company as it moves forward. Ford, while not a standout in any of the categories, was remarkably consistent, and should definitely be considered as an addition to your portfolio.

The article Three Key Metrics That Make This Automaker a Must Buy originally appeared on Fool.com is written by Hunter Hillman.

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