Investors, it makes sense to get it in gear with Goodyear Tire, if you can tolerate moderate risk. I'm Reiterating my Buy rating for Goodyear Tire (NYSE: GT), first recommended on May 5, 2009 at a price of $13.30. Goodyear is set to soar. Here's why:
The worst period in the U.S. auto sector's history (outside of the Great Depression) is over: U.S. manufacturer auto sales will move higher from here, and Goodyear will also benefit from a decent increase in foreign manufacturer auto sales (if a falling dollar doesn't raise imported auto prices too much. The First Call FY2009/FY2010 EPS estimates for GT are a loss of 57 cents and a profit of $1.37.
Institutional investors sense the above, and have bid-up Goodyear's stock price since March. Further, technically, Goodyear's chart appears to be forming a cup with a handle - a bullish sign. There is psychological resistance at $20, but with a P/E of 10, this should prove to be minor.
Finally, forget F2009's results --- look down the field, 6-9 months, as institutional investors do: from an investment standpoint, we're well into 2010, and stock prices reflect that likely, improved economic climate.
Stock Analysis: Goodyear Tire is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in GT now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your GT position before December 2009. Sell/Stop Loss if you were to buy shares in this company: $6.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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