Catalyst-based investing is about spotting the spark before the fire. It’s finding companies poised for a breakout due to specific, tangible events—think restructuring, policy tailwinds, or macroeconomic shifts. The Goodyear Tire & Rubber Company (NASDAQ: GT) is one such spark, fueled by cheap oil, a tariff-safe business model, and a transformation plan that’s turning heads.
I recommended GT in my latest American Stock Investor. Two days ago, Wall Street must have read my report because GT jumped from $10.49 to $11.94 – a 14% two-day gain.
Right now, the catalysts are stronger than ever. Let’s dive into why Goodyear remains a stealth winner, how it’s dodged the tariff bullet.
Tariff Safety: Goodyear’s Domestic Edge
In a world where tariffs are shaking up supply chains, Goodyear’s U.S.-centric model is a fortress. With President Trump’s administration pushing tariffs on car imports, companies reliant on foreign manufacturing are sweating.
Not Goodyear. About 60% of its sales come from North America, and most of its U.S. demand is met by domestic plants. Deutsche Bank notes that tires are currently excluded from planned levies, giving Goodyear a cost advantage over competitors exposed to import taxes.
This tariff safety isn’t just a shield—it’s a competitive moat. While rivals like Bridgestone face currency risks and global supply chain headaches, Goodyear’s focus on the U.S. market aligns perfectly with domestic driving trends. As tariffs reshape the auto industry, Goodyear’s poised to roll through unscathed.
Cheap Oil, More Miles, Worn Tires
When I last wrote, gas was $2.72 a gallon, a steep drop from $4 the prior year. As of June 2025, gas prices hover around $2.80, per the U.S. Energy Information Administration, keeping more cash in consumers’ pockets. Inflation has cooled further, with CPI at 2.6% year-over-year, acting like a stealth stimulus.
This fuels road trips, commutes, and errands—more miles driven means faster tire wear. Goodyear, with 75% of its revenue from the replacement tire market, is eating this up. High-cost, aftermarket 18-inch tires for drivers souping up older vehicles remain a top seller, setting Goodyear apart from peers like Michelin, who lean on OEM contracts tied to sluggish new car sales.
Cheap oil also slashes Goodyear’s costs. About 45% of its cost of goods sold is raw materials, with 70% tied to oil-based inputs like synthetic rubber. With oil prices stable, Goodyear expects $250 million in raw material cost savings in 2025, up from my earlier $200 million estimate. This cost relief boosts margins, unlike smaller players like Sumitomo, who lack Goodyear’s scale.
Goodyear Forward: A Transformation in High Gear
The Goodyear Forward plan is the engine of this story. Since January 2025, Goodyear has executed flawlessly, selling its Dunlop brand to Sumitomo for $526 million. This deal, plus other asset sales, has cut debt and boosted cash reserves to $1 billion by Q3 2024. The company delivered $347 million in segment operating income last quarter, with a 7.2% margin—its fourth straight quarter of margin growth. Goodyear now projects $450 million in savings for 2024, with run-rate benefits hitting $1.5 billion by 2026, surpassing my earlier $1 billion estimate.
Analysts are taking notice. Deutsche Bank’s Buy rating and JPMorgan’s Overweight call in April 2025 sparked a 10% stock surge in a day. With a trailing P/E of 13 and a forward P/E of 7, the market sees big growth ahead. Hedge funds like Citadel, holding 2.19 million shares, are doubling down. Goodyear’s 800 U.S. retail outlets and innovations like the Eagle F1 Asymmetric 6 tire keep it ahead of Michelin (flat stock) and Bridgestone (global supply chain woes).
Risks and the Road Ahead
Goodyear isn’t bulletproof. Inflation, though cooling, could spike raw material costs. Short interest is up 5.53%, with 8.72% of the float shorted, signaling skepticism. Tariffs could shift to include tires, though unlikely. Competitors like Michelin have deeper premium tire exposure. Goodyear’s replacement tire focus and tariff safety make it a purer bet.
Why GT’s Still a Buy
Goodyear’s catalysts—cheap oil, tariff safety, and the Goodyear Forward plan—are firing on all cylinders. At $11.98, with a forward P/E of 7, it’s undervalued. The replacement tire market, fueled by Americans driving older cars, is a cash machine. Add $1.5 billion in projected savings and a tariff-proof model, and GT’s set to roll.
I like GT as a safe bet over the next few quarters, and it is making us money. But it’s not the only great call I’ve had in American Stock Investor this year. Our closed positions are up over 148%. And we have three new stocks that you should buy right now. These are three Robotaxi stocks under $5. Click here to read the free research report.
All the best,
Christian DeHaemer
