It's Not Too Late To Buy Daimler
Charles Sizemore | Oct 11, 2013 10:49AM ET
After one of the best market days this year on Thursday, my recommendation of Daimler (GM ).
Yes, these are cyclical stocks, and the “E” part of the P/E ratio has a way of being volatile. And yes, the company just announced its best sales month in history in September, based on strong demand from China and the United States. But earnings would hardly appear to be near a cyclical peak given that Europe is only now emerging from recession.
And on this side of the Pond, Daimler is actively mulling expansion in the United States. The company is already bumping up against capacity constraints at its Tuscaloosa, Alabama plant. This follows plans to set up a new plant outside of Sao Paulo, Brazil as well.
All of this expansion spending will probably take a toll on margins in the coming 1-3 years. But I would consider that a high-quality problem!
Will Daimler take the crown in this year’s Best Stocks contest? That remains to be seen, and we still have two and a half months left in 2013. Anything can happen. But I continue to recommend Daimler in growth portfolios and highly recommend buying it on any dips.
Disclosure
As of this writing, he was long DDAIF.
Charles Lewis Sizemore, CFA, is the editor of the Sizemore Investment Letter and the chief investment officer of investments firm Sizemore Capital Management.
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