Pros and Cons to Buying Honda Stock

HONDA MOTOR CO (NYSE: HMC) didn’t start out as a car company, but it’s sure come a long way from the early days, when it sold motorized bikes back in 1946.Company founder Soichiro Honda did so well in the bike business he decided to expand his company, calling it the Honda Motor Co. when it rolled out in 1948.Thirty-four years later, Honda was doing so well it became the first foreign car maker to build a vehicle in the U.S. (the Honda Accord), and has gone to sell cars, trucks, SUVs, motorcycles, ATVs, boats, mountain bikes and even solar powered cells. Now, although profits have edged upward in the years following the Great Recession, auto analysts expect global auto sales to decline in 2019 as the global economy slows.Is it a good time to get under the hood and kick some tires on Honda stock? Honda stock is selling at this writing at $26.51 with a one-year target price of $34. The share price is down from $36 in early January of 2018, and the year-long trading range has been fairly narrow, at $26 to $37 per share. Its market cap stands at $46.3 billion. Financially, Honda was outsold by several of its key competitors in November, selling 120,1534 vehicles, compared to unit sales of 195,255 for Ford Motor Co. (F), 248,740 by General Motors Co. (GM) and 190,423 sales for Toyota Motor Co. (TM). Structurally, Honda has a good financial story to tell, as its fiscal second-quarter performance (ending Sept. 30) numbers were robust. Honda earnings per share beat analysts estimates by 11.6 percent and increased more than 45 percent from the company's fiscal first quarter, says Don Chung, an institutional trader at Hylink Ventures in Phoenix.Overall, Honda is finishing its fiscal third quarter strong, says Chung, who lists HMS stock as a “buy.”