What's Next for the Honda Stock Price After New $4.5 Million Venture

The Honda stock price closed down 0.28% Thursday after Honda Motor Co. Ltd. (NYSE ADR: HMC) announced the U.S. Federal Aviation Administration (FAA) certified its $4.5 million business HondaJet plane.

According to Bloomberg Business, the HondaJet was certified on Dec. 8. Honda currently has 25 planes in final assembly, and the auto manufacturer is now preparing for pilot training and deliveries.

Honda stock price Certification is a major milestone for Michimasa Fujino, the engineer who convinced Honda to stick with the HondaJet for decades, according to Forbes.

"We established Honda Aircraft as a new aerospace company and introduced our first product - an advanced light jet with technologies developed from serious research activities," Fujino stated. "We designed, tested, and have now certified this clean-sheet design aircraft - an unprecedented challenge for Honda."

In order to receive the certification, the FAA tested the performance, safety, function, and reliability of the HondaJet. Total flight hours for the testing exceeded 3,000, according to Forbes.

Fujino told CNBC that there are already more than 100 orders for HondaJets, and the first HondaJet is scheduled for delivery in late 2015 or early 2016.

And Honda has a very specific market in mind for its $4.5 million HondaJet...

When discussing the potential client base, Fujino stated, "Many of them are of course high-net-worth individuals but generally are very young entrepreneurs. Several of them are also pilots and fly themselves."

But despite the major announcement, the Honda stock price remained flat on Thursday. It seems investors aren't sure what to make of Honda pushing into a new field.

But with nearly three decades of experience building the HondaJet, Honda is far from a newcomer to the aviation industry.

And there's reason to believe that the HondaJet could be a catalyst for the Honda stock price in 2016...

HondaJet Sales Could Push Honda Stock Price Higher in 2016

It took three decades to develop, but the HondaJet is entering the market at just the right time for Honda...

In its latest earnings report, Honda missed analyst expectations. Honda reported profit of 164.8 billion yen ($1.36 billion) but was expected to report 176.6 billion yen ($1.45 billion).

The dismal earnings followed 12 straight months of declining sales in Japan, where it is the leader in automobile sales. According to Bloomberg Business, part of the reason for the declining sales in Japan is an increased sales tax.

Bloomberg Business stated that strong sales in China and the United States have offset decreased revenue from Japan. If sales started to fall in China and the U.S., the Honda stock price would be at a higher risk of falling because revenue would drastically decrease.

But the HondaJet could protect Honda against any slumping car sales, and the HondaJet is in a sector that is starting to grow.

According to Forbes, worldwide sales of business jets rose 6.5% in 2014. Sales of "light jets" like the HondaJet were also up, growing from 77 sales in 2013 to 87 in 2014.

Whether sales continue to slump in Japan or global sales start to fall, Honda now has a product with a $4.5 million price tag to offset any deep losses.

[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]

The Honda stock price is up 8.71% year to date, and analysts surveyed by Thomson/FirstCall project the HMC stock price has a one-year estimate of $35.69. That would be a gain of 11.28% from Thursday's closing price.

The Bottom Line: Honda entering the aviation field provides the automaker a new source of revenue. Total "light jet" sales were 87 for the entire industry in 2014, but Honda has already received 100 orders for the HondaJet. Honda has established a strong stake in an industry that will improve its profitability indefinitely.

Jack Delaney is an associate editor for Money Morning. You can follow him on Twitter and follow Money Morning on Facebook.

Profit Alert: Since Money Morning Executive Editor Bill Patalon launched his Private Briefing program just a few short years ago, he's recommended 192 stocks that have either doubled or tripled in value. The service has completely revolutionized the way people invest. Keep reading to find out more about his extensive research and premium stock picks...