The Zacks Analyst Blog Highlights: Facebook, Apple, Starbucks, Toyota Motor and Ford Motor

 The Zacks Analyst Blog Highlights: Facebook, Apple, Starbucks, Toyota Motor
                                and Ford Motor

PR Newswire

CHICAGO, June 12, 2013

CHICAGO, June 12, 2013 /PRNewswire/ announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Facebook (Nasdaq:FB-Free Report),
Apple (Nasdaq:AAPL-Free Report), Starbucks (Nasdaq:SBUX-Free Report), Toyota
Motor (NYSE:TM-Free Report) and Ford Motor (NYSE:F-Free Report).


Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of
the Day pick for free.

Here are highlights from Tuesday's Analyst Blog:

Driving Boom Fades: Will It Hurt Automakers?

According to a recent study by CNW, the percentage of car-less American
households increased to 9.3% in 2012 from 5.7% in 1991. The percentage could
further move up to 10% in this year or later according to the study.

Another study by the U.S. Public Research Interest Group ("PIRG") revealed
more shocking facts. PIRG found that motorists aged between 16 and 34 have
traveled 23% fewer miles in 2009 compared with 2001. Further, the ratio of
cars to motorists dipped 4% from 1.24 vehicles in 2006.

The trend clearly raises a question: Is the driving boom over? It is a complex
demographic issue that can be explained by many socio-economic factors. It can
also endanger the household vehicle business of automakers in the future,
which became a low-margin but stable revenue generating business after the

Two-Fold Problem

Firstly, when we look at the unemployment figures, the continuous improvement
looks impressive. Unemployment rate in May decreased to 7.6% in May this year
from 8.2% in the same month last year.

Unfortunately, the picture becomes gloomy when we consider the 16 to 24 year
age bracket. Unemployment rate in the bracket is very high at 16.1% now. This
could definitely take a toll on the automotive industry, since this age
bracket can be related to America's once popular "on the road" car culture.

The upward shift in the retirement age has also aggravated the unemployment
problem. The baby boomers, unlike earlier, are willing to work for a long time
in order to make up for the loss in wealth during the latest recession. This
shifted the retirement age to the highest level in more than two decades,
reducing the labor turnover. As a result, youngsters find it hard to occupy
seats in the job market.

Secondly, mounting student debt is slowly becoming an impending crisis in the
U.S. Outstanding student loans in the U.S. stood at $986 billion in the first
quarter of 2013, up $20 billion from the prior quarter. Over 10% of these
student loans are more than 90 days delinquent.

While student loans help youngsters graduating for obtaining a high-paying
job, the same becomes a burden when they are unable to find their preferred
job. If paying hefty installments on these loans become troublesome, can they
dare think of affording a new car or other appurtenances?

Changing Priorities

There seems to be a shift in car buying younger generation as the priorities
of youngsters have changed due to many emerging needs in modern life.
Youngsters feel much better nowadays by staying connected to friends through
Facebook (Nasdaq:FB-Free Report) in their newly purchased Apple
(Nasdaq:AAPL-Free Report) iPad or sipping a cup of newly blended Starbucks
(Nasdaq:SBUX-Free Report) coffee with college buddies rather than taking a
long car ride.

Apart from the opulences, youngsters are inclined to break many social
conventions. They now prefer to delay buying homes and achieve parenthood much
later than their earlier generations. At the same time, they seem to follow
several austerity measures in order to face the uncertainties in the job
market such as living with the parents, driving their cars occasionally and
saving money.

Also, the younger generation no longer feels the ardent need to purchase cars
due to the developing public transit system. Public transport is gaining
importance due to increasing traffic gridlock across the major cities around
the world. Hanging around the city with the help of ubiquitous public transit
system and cabs is much more pleasant and frugal nowadays than being stuck in
a gas-guzzler.

In fact, many governments across the world have taken measures to curb the use
of personal vehicles. They are levying heavy taxes on new cars, which are
making household cars costly. For example,

Toyota Motor

's (NYSE:



Free Report

) popular Prius hybrid costs over six times higher in Singapore compared to
the U.S. due to exorbitant tax rates in the country.

Does it Really Matter to Automakers?

What should be the automakers' take on the waning driving boom? Definitely, it
calls for a change in their marketing strategy, which should be focused more
on non-household vehicles or vehicles required by corporations, government
agencies or car rental companies known as fleets.

The recent trend suggests that the automakers are already inclined towards
fleet sales as the economy recovers and businesses improve. Ford Motor
(NYSE:F-Free Report) sells nearly a third of its vehicles in the U.S. to fleet
buyers while Chrysler sells roughly 80% of its minivans to fleet customers.
However, focusing too much on fleet sales could be detrimental as they
contributed to the Detroit Three's woes prior to the recession.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of
the Day pick for free.

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