Will Toyota’s Stock Continue to Outperform as the World’s Largest Car Maker?

Toyota Motor Corporation (NYSE:TM) is the world’s largest automobile manufacturer by volume. With shares trading around $85.92, is TM an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalysts for the Stock’s MovementToyota Yaris

The major news event affecting Toyota this year is an ongoing territory dispute between China and Japan that resulted in tremendous sales and production cuts. Anti-Japanese sentiment in many parts of China led to demonstrations against the automaker and other Japanese companies.

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Chinese sales in September dropped 49 percent, followed by a 44 percent sales drop in October, and a 22 percent sales drop in November. Sales in China for the first 11 months of the year were down 3.3 percent to 749,600 units, a far cry from the 1 million target level established toward the beginning of the year.

Chinese deliveries in the July-September quarter dropped a record 23 percent.

T = Technicals on the Stock Chart are Strong

The stock price was recently 1.54 percent above its 20-day simple moving average, or SMA; 6.75 percent above its 50-day SMA; and 7.25 percent above its 200-day SMA.

Since the beginning of 2012 the stock price has been in a fairly pronounced upward trend, rising 29.87 percent this year to date and 29.16 percent year over year.

As a benchmark, the S&P 500 has risen 12.87 percent year-to-date, and has risen 15.80 percent year-over-year.

For comparison, General Motors Company (NYSE:GM) has risen 21.76 percent, Ford Motor Co. (NYSE:F) has risen 3.05 percent, and Honda Motor Co., Ltd. (NYSE:HMC) has risen 7.12 percent this year to date…