Toyota Motor’s Stock To Continue Rally?

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TM: Toyota Motor logo
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Toyota Motor

Toyota Motor (NYSE: TM), one of the biggest automobile manufacturers around the world, saw its stock rise by 2.5% to $180 in the last five trading days. In comparison, the broader S&P500 rose by 0.4% over the last five trading days. The rise in the previous week was primarily due to the fact that in Q2 2021, Toyota Motor outsold General Motors in the U.S. for the first time ever by reporting sales volume of 688,813 against GM’s 688,236. This was due to Toyota’s better management of the global chip shortage. Now, will the company continue an  upward trajectory over the coming weeks, or is a fall in the stock imminent?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price using multiple years of historical stock data, returns for TM’s stock average around 0.8% in the next one-month (twenty-one trading days) period after experiencing a 2.5% rise in a week (five trading days). But how would these numbers change if you are interested in holding TM stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Toyota Motor stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

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IF TM stock moved by -5% over 5 trading days, THEN over the next 21 trading days, TM stock moves an average of 2.4% with a 71.6% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of Toyota Motor Stock Movements

Question 1: Is the average return for Toyota Motor stock higher after a drop?

Answer:

Case 1: Toyota Motor stock drops by -5% or more in a week

Case 2: Toyota Motor stock rises by 5% or more in a week

Is the average return for Toyota Motor stock higher over the subsequent month after Case 1 or Case 2?

TM stock fares better after Case 1, with an average return of 2.4% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 0.9% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Toyota Motor stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Toyota Motor stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For TM stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for Toyota Motor after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

TM’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Toyota Motor stock by changing the inputs in the charts above.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.

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