Stocks for newborns: Can baby say Tata?

If you're going to saddle a baby with stock, at least give her one she can pronounce.

By Apr 30, 2012 10:34AM
Credit: © Chris Ratcliffe/Bloomberg via Getty Images
Caption: A Tata Megapixel automobile, produced by Tata Motors Ltd., is seen on display on the second press day of the Geneva International Motor Show in Geneva, Switzerland, on Wednesday, March 7, 2012One in a special Top Stocks series on buying stocks for newborns.

By Igor Greenwald,

Does anyone give stock to newborns anymore? I confess to have completely overlooked this question.

I imagine stocks go into the same storage bin with sharp knives, lead-painted Chinese toys and options on Florida swampland. After a gut-wrenching decade that was as likely to leave investors broke as to make them rich, you'd think a nice bodysuit from Carter's (CRI) would be a more sensible present.

But zany souls who wish to expose unsuspecting innocents to their faith in equities must exist, because there's a site catering to such impulses. Of course, the stock certificate and the frame are likely to exceed the cost of a share of stock, but in this case it's obviously the thought that counts.

Selecting stock for a newborn prompts us to try to think decades ahead, an exercise seldom attempted these days in all the confusion about tomorrow. But speculation about the long term does make us look for the biggest and most persistent trends. And that seems like a useful reality check in an age of flash crashes and fixation on year-to-date performance.

My own pick for a stock to buy and forget is Tata Motors (TTM), whose inspiring recent past I reviewed here. In the two months since, the stock has rolled to fresh highs, propelled by booming auto sales in India and the growing success of its luxury Range Rover and Jaguar brands in the U.S., China and Russia.

It's a virtual certainty that the Chinese and Indians will need hundreds of millions (a billion?) extra cars as they get richer, and Tata's low-cost Nano model demonstrates it knows what those emerging markets really prize in a vehicle, and what they can dispense with for the time being. 

At the same time, the company's overhaul of Range Rover and Jaguar, which seemed to be beyond repair previously, showcases operational expertise that, frankly, none of its Western competitors can match.

Tata's place within Tata Group, a conglomerate run by an extended Indian family, encourages a long-term focus so plainly missing at many U.S. companies managed by extremely well-paid mercenaries. Revenue grew 43% in the most recent quarter, and there's no telling how much higher it might go should Tata aggressively push its lower-cost cars in the U.S. 

This goodness is on sale for just 10 times trailing earnings. Plus, Tata rolls off a young tongue. Try teaching a newborn to say Stratasys (SSYS).

Read Igor's full story on Tata here.

Apple (AAPL) is another stock in the midst of a debate about its long-term prospects, and MoneyShow's Jim Jubak shares his answer here. And then there are emerging markets; Howard Gold sees powerful long-term growth, but two reasons why investors should wait to invest there. On the other hand, Jon Markman sees undeniable ground-floor opportunities in this corner of the global growth story.

More from the series

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