Last week’s UAW (United Automobile Workers) vote in Tennessee is getting a lot of attention by the political pundits.
No matter what you think of the vote that will keep the UAW out of a Volkswagen factory, one thing is for sure, it is a big win for foreign automakers already building cars in America.
Did you know that every BMW X3 sold in the world (as well as the X5 & X6 models for you fat cats) are designed in America and built in BMW’s Spartanburg, South Carolina plant.
It gets even better…
- The plant opened in 1994 and has grown ever since.
- From 2008-2010, $1 billion was invested to ramp up production 50%.
- 70% of the plant’s production is exported to markets all over the world.
- The University of South Carolina estimates that the plant is responsible for 23,000 well paying jobs.
BMW’s vote of confidence in the American worker and market is welcome. Foreign investment like this is one of the keys to turning our economy around but we need more than that before adding its stock to our global portfolio.
What Global Economic Weakness?
The pundits can’t stop talking about our economic miseries and tapped out consumers. Apparently, BMW executives and customers do not watch CNN or MNSBC for they are going flat out.
The world’s largest luxury carmaker racked up $2.8 billion of net profits during the last six months of 2013. Coming out of the 2008 financial crisis, BMW targeted five fast growing markets: Brazil, Russia, India, South Korea and Turkey. It now leads in every one of them (OK, it’s a tie with Mercedes in Russia). You might be surprised to see Turkey on this list but the country now has twice as many billionaires as Japan and is the 16th largest economy in the world with a population exceeding 80 million.
Looking Down the Road
This focus on new growth markets highlights a BMW trademark – looking ahead and what the Japanese refer to as “kaizen” – constant and steady innovation.
Its BMW i Ventures $100 million investment fund support new partners and technologies in an effort to stay ahead of competitors and the growth curve.
BMW’s “Project i” is already in full swing with the launch of the electric i3 and the hybrid i8 scheduled for 2013. It will be make quite a media splash as these cars are made of aluminum and carbon fiber plastic giving them a range of 140 miles.
Why You Should Bet on BMW Now
It may surprise you that a high profile company like BMW is not listed on the NYSE or Nasdaq.
This a great example of what I refer to as a “pink sheet, blue chip” since it trades in the over-the-counter pink sheets as (BAMXY.PK).
BMW lost the luxury best selling sweepstakes to Mercedes-Benz last year in part because its rival rolled out the CLA, a new class of sedan that starts at less than $30,000. In the few months these starter Benzes were available in 2013, North American drivers bought roughly 14,000, helping Daimler sales top BMW by 3,300 cars for the year.
BMW is striking back with a spanking new 2-Series priced at $33,000 – a move into a lower cost lane with a much bigger car than the 1-Series it will replace. One reason that BMW is run with a sharp eye on the future is that 46% of its outstanding shares are in the steady hands of its strategic partners.
The stock has decent liquidity with an average daily volume of 50,000, is trading at only about eleven times trailing earnings despite being up 18% over the last six months. And despite all the talk of a global slowdown, BMW sales just power on up 11% year over year.
Opportunity awaits,
Carl Delfeld.
Note from Midas Legacy Editor: We’re honored to have Carl Delfeld on our expert panel. Carl is founder of several financial organizations around the world, and he has advised the US senate and the US Treasury among many other large names. He is also the author of three investment books. Carl’s stock recommendation service, The Value Bounce, is the result of all his experience and research as he cherry-picks trades that allow you to have your cake and east it.
