The Toyota Enigma

With its cars so popular, why are investors neglecting the stock?

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July 10, 2006 at 4:00 AM UTC

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Peter Lynch, Fidelity Investments' famous fund manager, used to urge people back in the '80s to invest in the companies that dominated their everyday lives. And a current TV ad for an online brokerage shows a mall-bound daughter unwittingly giving her perceptive dad a fashion-stock tip. That "buy what you know" adage hasn't changed.

So why doesn't a lightbulb go off every time Dad starts up his Camry? Toyota Motor Corp. (TM ) is on pace to be the world's No. 1 auto maker by 2008. It produces nearly one of every six cars sold in the U.S., including nine models in the South and Midwest, where it employs 32,000 Americans. Even New York livery cab fleets, once largely made up of leathery Lincolns, now feature Toyota's Prius, the hit hybrid taking coastal cities by storm.