This tire stock trades at incredible discounts

Goodyear is an American international company, manufacturer of tires and other rubber products.

Key points

  • Now that markets are turning to safer, “boring” manufacturing names hoping for a Federal Reserve turnaround, one stock quickly emerges.
  • Goodyear Tire stock represents the only credible growth story in today’s market; analysts also see an advantage in closing the gap compared to the rest of the market.
  • No competitor comes close to offering such growth at this clearance discount.
  • 5 stocks we like best from CME Group

It seems that the boring names in the economy could be the ones that attract the attention and capital of all types of investors, both retail and professional. But Wall Street bigwigs may be interested in some of the industrial and manufacturing names in today’s economy.

For these same reasons, you will see how and why Goodyear tires and rubber NASDAQ:GT could be the best stock to consider in your portfolio of upcoming “boring names” to ensure your capital is not only well protected in this potential move of money, but also exposed to above-average growth rates.

Hit the snooze button

With a VIX now at levels not seen since 2019, this is no time to be a hero and try to trade in and out of markets; nor is looking for unreasonable growth stories the best choice.

Instead, read the latest quarterly reports from companies like BlackRock Inc. NYSE: BLACK AND The Goldman Sachs Group NYSE:GSwho have seen net outflows in their ETF assets, perhaps because they are eager to trim some profits now that the S&P 500 and NASDAQ have hit all-time highs.

They need to put this newfound liquidity to good use elsewhere, and it won’t be in the tech names credited with driving the indices to their new lofty levels. It will probably find its way into the SPDR fund for selected industrial sectors NYSEARCA: XLIbut how can you be sure?

Sponsored by the Fed’s interest rate cuts, which, according to the FedWatch tool of ECM Group NASDAQ: ECMcould occur as early as May of this year, there could soon be an explosion in demand for American products, resulting in increased profits for manufacturers like Goodyear.

If that’s not enough of an incentive, let’s remember that there is no other growth story like Goodyear in its sector, and this one makes sense.

Low oil prices today may serve as a cushion for the company to maintain its high margins and returns on capital; just consider the $17.2 per share price target set today, which calls for a 27.5% upside from the stock’s position today.

Double check

The only worthy opponent to share the significant market share that Goodyear has in the tire and rubber market is Bridgestone Corp. OTCMKTS: BRDCYa stock that analysts don’t seem particularly enthusiastic about compared to Goodyear.

Analysts believe this stock can grow its earnings per share by around 19.1% over the next 12 months; the double-digit growth of the market presented today is interesting. However, Goodyear quickly steals the spotlight in that department.

The smaller of the two, with a market capitalization of $4 billion (versus Bridgestone’s $29.8 billion), Goodyear is projecting EPS growth of 53.8% next year, significantly higher than that of its competitor.

While it’s hard to believe that a tire company could make such a massive jump, you now know that analysts have set double-digit upside in their price targets for a reason.

Bridgestone shares are trading at 96% of their 52-week high prices, leaving little room to move higher before hitting that wall of resistance. On the other hand, Goodyear is trading just 82% of its 52-week high, giving you enough room for the stock to make up some ground.

Bridgestone is selling at a price-to-book value of 1.3x, with a 30% premium. Goodyear stock has a retail price of 0.8x P/B, reflected as a 20% discount! This discount also matches the upside expected by analysts.

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