Goodyear Tire & Rubber (GT) seems like a solid investment given the following:
- Price of rubber β Over a 10+ year time horizon, the $/pound of rubber seems cheap. Given the inelasticity of rubber demand, this would positively impact Revenues as well as Profit Margin %. Global price of Rubber (PRUBBUSDM) | FRED | St. Louis Fed
- Road-trip travel demand is underestimated β I've been hearing so much about pent up demand to travel by airlines, but what about the All-American family traveling by car/RV? For those that haven't done traveling over the past year, tires are a necessity.
- Employees return to offices β As an employee that has WFH since last March, our employer is now expecting us to return to the office by end of summer. Once this happens, I personally will have to get my tires replaced. I expect millions of Americans to do the same.
- Inflation Hedge β Returning to point #1, the inelasticity of demand will allow GT to pass price increases to the consumer instead of GT retaining these price increases.
Feel free to roast me and/or critique my logic.
Disclosure of interest: 07/16/2021 18.00C; 10/15/2021 19.00 C