Large-cap stocks have always found buyers in the stock market, regardless of their valuations or price inflation. Typically, “mega-cap” companies have market capitalizations above $200 billion and generally exhibit an established track record of consistent profitability, strong fundamentals, strong brand value, and market-leading positions. Masu.
Unsurprisingly, chipmaker Nvidia’s stock price is 
NVDAthe company defining the generative AI revolution, which delivered the most upside among mega-cap stocks this year.Despite market-wide turmoil as the second quarter begins, Jensen Huang’s company’s impressive performance shows no signs of slowing down.. NVDA’s first quarter return of 82.46% completely overwhelms the second place “Magnificent Seven”. peer, meta platform 
metaan increase of 37.33% through the first three months of this year.
However, there is another supercap company that virtually matched META’s Q1 earnings with a gain of 37.25% during the first quarter. This was somewhat unexpected, as the company is not exactly at the forefront of artificial intelligence (AI) breakthroughs. Nor is it a large pharmaceutical company that is at the forefront of groundbreaking medical discoveries. Actually, it’s a car manufacturer.
About Toyota Motor Corporation
Established in 1937 by Kiichiro Toyoda as a spin-off of the Toyota Motor Corporation Toyota Industries Plant. 
TM is the world’s largest car manufacturer. The company designs, manufactures, and sells luxury cars such as Toyota brand vehicles and Lexus. It also provides financial services such as auto loans and insurance to customers around the world.
Shares of Toyota Motor Corporation, which has a market capitalization of about $328 billion, have risen 69.3% over the past 52 weeks, thanks in part to impressive first-quarter profits. TM stock has a dividend yield of 1.59% and payments are made semi-annually. Furthermore, the dividend payout ratio remains at 17.53%, which means there is room for future dividend increases.
So, what was the trigger for the Mag 7 size rally at TM this year? Let’s take a look.
Toyota’s big bet on hybrids pays off
The electric vehicle (EV) market will probably grow explosively in the coming years. However, the uptake of pure EVs has been slow as consumers are wary of current charging infrastructure and still-rising vehicle prices. This is where hybrid EVs come in, and this corner of the market is expected to reach around $444 billion by 2030, with a CAGR of 7.3%.
This means Toyota’s focus on developing hybrid vehicles, including the Prius, Camry Hybrid, RAV4 Hybrid, and Highlander Hybrid, is particularly cautious at this time.
That focus is reflected in the company’s latest quarterly results. In its third quarter fiscal year, Toyota reported sales of 951,000 hybrid vehicles, representing 47% annual growth and accounting for 32% of global retail sales.
Executive Vice President Yoichi Miyazaki reiterated the company’s focus on hybrid vehicles, predicting that hybrid vehicle sales will increase from 3.4 million units in 2023 to 5 million units by around 2025. “Hybrid vehicles are a realistic solution to achieving carbon neutrality,” Miyazaki said on Toyota’s third-quarter conference call.
Investment in EV battery technology
However, that doesn’t mean Toyota is cutting corners in the EV race.How to compete with Tesla 
TSLA, is accelerating the development of all-solid-state battery technology. What is their purpose? Mass-produce next-generation batteries at the same production rate as existing EV batteries.
Solid-state batteries offer significant advantages over standard EV batteries, including faster charging, potentially longer range, and reduced fire risk. This translates into an electric vehicle with a breakthrough range of 750 miles, more than double that of Toyota’s current EVs, and a charging time of just 10 minutes. For comparison, the main Tesla Supercharger network provides the equivalent of 200 miles of range with just 15 minutes of charging.
Toyota plans to release these revolutionary batteries in 2027 or 2028. This could put batteries at the forefront of EV technology, with the potential for vehicles to boast an incredible 745 miles of range and 10-minute charging convenience, more than today’s gas-powered cars.
Is Toyota Motor Stock Easy to Buy?
Even after Toyota’s impressive rally this year, the stock still looks like a good value. TM’s forward price/earnings ratio is 10.92x, while the industry median is 16.78x. Similarly, the price/cash flow multiple of 7.38 is a bargain compared to the industry median of 10.60, while the forward price/sales ratio of 1.16 represents only a small premium over its peers.
In terms of growth, analysts expect the company to significantly lead the industry. TM’s forward revenue growth is 7.8%, compared to the sector median of 3.9%, and its forward EPS growth is 94.4%, outpacing its competitors’ expected bottom line growth of 2.69%.
Overall, analysts remain optimistic on Toyota stock, rating it a Moderate Buy on average. Among the six analysts covering the stock, they are evenly split between “strong buy” and “hold” ratings. Wall Street’s price target is $260.50, indicating an expected upside of about 8.6% from Tuesday’s closing price.
On the date of publication, Pathikrit Bose did not have (directly or indirectly) any positions in the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see the Barchart Disclosure Policy here.
