Dear Mr. Berko: It’s good to see your column back again in a South Florida publication. Two years ago, we bought a Subaru Outback crossover. We liked it so much that we bought a Subaru Forester as a second car late last year. I’d like to buy Subaru stock, but I can’t find it listed anywhere. Where can I find it? And please tell me whether you think the stock is worth buying.
— N.E., Fort Lauderdale, Fla.
Dear N.E.: You’re looking in all the wrong places. Though you probably know that the demand for Subaru’s Outback and Forester models is so strong that Subaru is in the process of expanding its American plant to produce another 100,000 vehicles by the spring of 2017, you probably didn’t know that when spelled backward, “Subaru” is pronounced “you are a bus.”
Subaru (the Japanese name for the Pleiades star cluster, or the Seven Sisters) is the automobile manufacturing division of Fuji Heavy Industries (FUJHY-$18). The company is the 18th-largest automaker (by production) in the world. Subaru is different from its Japanese competitors in that 75 percent of its cars and parts are still made in Japan. Its only overseas manufacturing facility — which is in Lafayette, Ind. — is currently in the process of trying to handle record demand. Owning shares of parent Fuji Heavy Industries is the only way to own shares of Subaru. Fuji should earn $2.54 a share this year, and its 70-cent dividend yields 3.8 percent.
Fuji Heavy Industries is a $31.6 billion-revenue company with a very impressive 13.3 percent net profit margin, which is 2 1/2 times better than Ford’s and General Motors’. Frankly, if Ford and GM were managed as well as FUJHY, those issues might be trading at twice their current prices. This year, Subaru may sell over 1 million vehicles, which would account for 92 percent of FUJHY’s 2016 revenues. FUJHY employs 31,000 workers to manufacture and sell automobiles and their various parts. The remaining $3 billion of revenue is derived from the sale of aerospace-related machinery and components, agricultural machinery and components, and construction machinery and components.
