Tata Motors (TTM): Two killer numbers

By Paul Goodwin, Editor of Cabot China & Emerging Markets Report
From Cabot Wealth Advisory 10/20/11

Despite my personal preference for growth stocks, there are times when an investor has to give a nod to reality.

In a market like this, great setups for growth stocks are thin on the ground, and some of the old leaders are springing leaks left and right.

So it's a good time to get in touch with your inner value investor, and that's what I'm doing with Tata Motors (TTM).

Tata Motors is an Indian car and truck builder that manufactures an astonishing variety of vehicles, from the Tata Nano, the world's cheapest, fully enclosed four-passenger car, to Jaguars and Range Rovers. The company sold just over one million vehicles during its 2010-2011 fiscal year that ended in March. That's up from 870,000 the previous year.

Q2 results extended the company's string of quarters with double-digit revenue growth to seven, although earnings dipped a tad (down 3%) during the quarter. So this is a growing, solidly profitable company.

There are two killer numbers for TTM. The first is its P/E ratio of 6, which is absurdly low for a profitable manufacturer in a high-potential home market that also has significant overseas opportunities in its Jaguar and Range Rover lines.

The second number is 318, which is the number of institutional investors who are onboard with the stock. That number was 214 a year ago, and has increased steadily every quarter since the beginning of 2009.

Tata's management has shown both its ambition in taking on two international prestige automotive lines and its competence in managing the integration of those brands.

After a drop from 38 in late 2010 to a sloppy triple bottom just below 15 last month, TTM isn't a growth investor's poster child. But for those with patience (and who appreciate the stock's 2.2% forward annual dividend yield), TTM offers a solid opportunity.

You could buy TTM here and hope for the best or you could check out Cabot China & Emerging Markets Report, the top source for the best stocks in the world's fastest-growing economies. The Report has been named one of the top-performing newsletters since its inception in 2004 and there's a lot more where that great growth came from! Get started today!