Respected Japanese automaker Nissan Motor Company Ltd (OTCMKTS: NSANY) employs around 95,000 people (directly and indirectly) worldwide.
The company continues to realize brisk sales for its SUV and crossovers. Nissan, which sells its cars under the Infiniti, Datsun, and Nissan brands, also has a 17-year old successful partnership with the French automobile manufacturer Renault. However, the shares of Nissan, which closed at $17 yesterday, continue to trade near the 12-month low of $16.57. There are some compelling reasons to take a long position in the Nissan counter at the current levels.
Firstly, the weak Japanese Yen continues to aid exports and better operational performance of the company. Against the US dollar, the exchange rate of the Japanese Yen had weakened to 124 in 2015, from about 90 in 2012. For the nine months (fiscal 2015) ended March 2016, the company recorded net sales of 8.943 trillion Yen, up 10.6% from 8.088 trillion Yen recorded in a similar period of fiscal 2014.
During the nine months ending March 2016, the net income increased 33.7% to 452.8 billion Yen, from 338.8 billion yen in the nine months ended March 2015. The company achieved a blazing performance, despite a slowdown in China.
The company registered a 19% growth in sales in December and outperformed the Nikkei 225 index. On a y-o-y basis, in March, the US sales grew 12.7% to 163,559 vehicles. The sales went past Kelley Blue Book estimates of 9.6% growth.
The growth was widespread across all the variants. The SUVs and truck sales registered 9.4% growth, while the Nissan car sales increased by 15.6%. In particular, the Murano (crossover) recorded an increase in sales of 56.1% to 8,657 units.
In an effort to trigger an uptrend in the share price, the company had announced its intention to re-purchase 300 million shares by spending up to 400 billion Yen (~$3.5 billion). The intended re-purchase corresponds to 6.7% of the total issued stock of Nissan.
As of December 31st, the company had 800 billion Yen in cash and investments. The forward-looking PE ratio of the company is only 6.9. Similarly, the price to book value of the company is less than 1 (0.9). The industry average is 1.3. Thus, fundamentally, the stock is expected to move up in the coming weeks.
Technically, as the chart indicates, the stock garners support at 17.50. A major hurdle exists at 21. The RSI indicates that the stock is about to enter the highly oversold region.
A one-touch call option contract or even a ladder contract with target levels beginning at about $18 and ending near $21 would work well for binary options traders, under these circumstances. The suggested expiry date for a one-touch call option trade is April end. On the other hand, for a ladder options contract, a mid-May expiry would be preferable.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
