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Cars and Drivers

Tires Defy Auto Slowdown Woes… Trading Against The Grain

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By Jon C. Ogg Updated Published
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Apparently it seems that as long as you are driving, you have to keep buying those darned tires.  Goodyear Tire & Rubber Co. (NYSE: GT) showed up as an unusual price gainer this morning but not on news of its own. The tire maker reports earnings next Tuesday. What is driving the gain here is French tire-maker Michelin.  Yes, a French company is driving (no pun intended) and American company.  Michelin somehow reaffirmed its financial targets for 2012 after having a 37% growth in its local earnings for the first half.  Volumes were down, but pricing was higher.  If a French company can maintain its outlook, perhaps an American company can too.

Shares of Goodyear Tire & Rubber Co. (NYSE: GT) are up 5.5% at $10.44 so far on the day.  Even Cooper Tire & Rubber Co. (NYSE: CTB) is up 5.1% at $16.95.

One area of concern is that Ford Motor Co. (NYSE: F) is down by 0.2% at $8.94, but that is only about 1% above its 52-week low.  The auto giant recently blamed Europe and slowing Asia for its earnings woes for the rest of 2012.  Apparently drivers are still buying new tires even they might not buy new cars as readily as before.

Is it irony or paradox that a French tire giant would dominate an American tire giant trading trends?  To prove a the point: Michelin shares closed up 8% on the day in local trading in Paris on Friday.

Here are the 5 ADRs from Europe we tracked yesterday which are significantly outperforming.  Maybe it isn’t all bad news out of Europe after all.

JON C. OGG

Photo of Jon C. Ogg
About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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