by Carl Delfeld, Investment U Senior Analyst
Thursday, October 6, 2011: Issue #1616
This week, I did some serious shopping for a BMW X3.
I know what you’re thinking.
“What a hypocrite Carl is. He’s constantly preaching about America’s strengths and economic comeback, and then he has the nerve to go out and buy an import!”
Hold on.
Every BMW X3 (as well as the X5 and 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 to 2010, $1 billion was invested to ramp up production by 50 percent.
- Seventy percent 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; however, 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 MSNBC.
The world’s largest luxury carmaker racked up $2.6 billion in net profits during the first six months of this year. The company set a sales record in July and is on track to do the same for 2011, with a goal of 1.6 million auto sales.
Coming out of the 2008 financial crisis, BMW targeted five fast-growing emerging markets: Brazil, Russia, India, South Korea and Turkey. It now leads in every one of them. (Note: 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 sixteenth-largest economy in the world, with a population exceeding 80 million.
BMW’s Constant and Steady Innovation
This focus on new growth markets highlights a BMW trademark – looking ahead at what the Japanese refer to as “kaizen” – constant and steady innovation.
Its BMW iVentures $100-million investment fund supports 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 is 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 BMW Group (OTC: BAMXY.PK).
All the positive developments for BMW are developing as the German DAX 30 Index dropped 25 percent in the last three months and BMW Group plunged 37 percent since late July. Rather than being driven by BMW’s financial performance, this weakness is all about big picture concerns such as a weak euro, Greece, fears of global recession and so on…
However important you might think these concerns are, it’s all just guesswork. A weaker euro helps BMW to be more competitive in global markets. I think BMW will power through whatever the economy throws at it.
Take advantage of this disconnect between BMW’s performance and a depressed market. The trading volume in BMW Group is uneven, so use caution.
Good investing,
Carl Delfeld
Editor’s Note: As a writer for Investment U, Carl Delfeld has been covering the major trends in emerging markets and the best companies to watch during this difficult economic times. But very soon you’ll be able to access his premium research on a daily basis – including his favorite stock picks – for just pennies a day… To find out how, Go Here Now.
Article by Investment U
