by Paul Good­win, edi­tor The Cabot China & Emerg­ing Mar­kets Report

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The Cabot China-Timer has flashed a new buy sig­nal, telling us the trend of Chi­nese and emerg­ing mar­ket stocks has turned back up. No one knows how long this sig­nal will per­sist, and you shouldn’t try to guess. Instead, your best move is to go with the evi­dence, which is now bullish.

India’s Tata Motors (NYSE: TTM), the largest truck and auto maker in the sub-continent, has been a lit­tle of both over the years, but it looks like the time is right for a new advance.

Chart: MarketClub.com

[AA] Inci­den­tally, Mar­ket­Club flashed a weekly and daily 'trade tri­an­gle' at $15.99 and $15.55 respec­tively on 2/26, and con­firms TTM is in a '(+100) strong uptrend.' MarketClub's monthly trade tri­an­gle flashed when TTM was trad­ing at $5.41, on last April 2.[AA]

Tata Motors is run by Ratan Tata, the great-grandson of Jamsedji Tata, who founded the Tata fam­ily empire. Ratan Tata is now the Chair­man of Tata Group, which includes com­pa­nies in steel, power, con­sult­ing, chem­i­cals, hotels and tele­com services.

Tata Motors was founded in 1945 as a man­u­fac­turer of loco­mo­tives, but made its rep­u­ta­tion in man­u­fac­tur­ing trucks and buses; it’s the fourth-largest truck man­u­fac­turer in the world and the second-largest bus manufacturer.

The com­pany has been aggres­sive in pur­su­ing growth, buy­ing Daewoo’s truck divi­sion in 2004 and tak­ing over the Jaguar and Land Rover brands from Ford in 2008.  In 2009, the com­pany acquired His­pano Car­ro­cera, a Span­ish bus and coach body manufacturer.

But the prod­uct that has kept Tata Motors on investors’ minds for years has been its com­mit­ment to the Tata Nano, a fully enclosed, four-door, four-passenger car that is touted as “the least expen­sive pro­duc­tion car in the world.”

Tata’s com­mit­ment was to sell the car for 100,000 rupees (or one lakh rupees), which amounted to about $2,000 at the time of the announce­ment. The Nano actu­ally arrived for sale on March 23, 2009.

The Nano gets about 61 miles per gal­lon on the high­way and 52 MPG in the city from its two-cylinder engine and has a top speed of about 65 MPH.  It is now in wide dis­tri­b­u­tion through­out India, and is sched­uled for export to Africa and Europe as reg­u­la­tory guide­lines are met.  A hybrid ver­sion is report­edly in devel­op­ment along with a fully elec­tric model.

The Nano is cru­cial for Tata Motors because its low price puts the car within reach of an enor­mous num­ber of poten­tial own­ers in India. But it’s not the whole ball game.  Tata had annu­al­ized sales of $16.4 bil­lion in 2009, and its busi­nesses include engi­neer­ing and con­struc­tion fi rms, auto fi nanc­ing, sup­ply chain man­age­ment and elec­tron­ics and plas­tics manufacturing.

Tata Motors’ takeover bid for Jaguar Land Rover was a drag on the company’s finances for months, requir­ing a bridge loan to com­plete.  But the financ­ing came together in late Feb­ru­ary and the deal was fi nal­ized.  Some ana­lysts are wor­ried about the repay­ment sched­ule for these loans, but the company’s greatQ4 earn­ings news showed a rebound in Jaguar Land Rover sales and Tata’s highest-ever one-month car sales in February.

Sales grew 23% in 2008 and 66% in 2009, although the Jaguar Land Rover takeover sup­plied a sub­stan­tial chunk of that 2009 increase. The prospects for future sales depend heav­ily on the health of the global econ­omy, but investors are clearly bet­ting that the recov­ery will continue.

Learn more about this finan­cial newslet­ter at Paul Goodwin's The Cabot China & Emerg­ing Mar­kets Report.

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