If you’re in the market for an auto stock, chances are Toyota Motor Corp. (NYSE: TM) is among the companies you’re considering. And why not? Toyota is one of the best names in motor vehicle manufacturing. Plus, shares are expected to rebound in the second half of 2011, following a first-half slump related to production delays caused by Japan’s earthquake and tsunami in March.

How about in the longer-term, though? Will Toyota shares be worth owning in coming years? Well, they should be decent, at least… maybe even very good. Analysts predict annual growth in sales, cash flow and earnings of 13%, 13.5% and 11.5%, respectively, during the next three to five years. So a total return for the stock of anywhere from 20% to 80% is possible in that time, analysts estimate.

However, there’s a potentially better option to consider before establishing a position in Toyota or any other auto stock. This company, which is quickly gaining a reputation as a leader in battery-powered electric cars, may not increase sales or cash flow as quickly as Toyota (growth rates of 6% and 9%, respectively, are forecasted). However, earnings are expected to rise as much as 32% annually in the next three to five years (nearly three times as fast as Toyota’s), which would take earnings from $1.94 per share in 2010 to as high as $4.46 a share by the end of 2016. Analysts think such results could propel shares 35% to 105% higher in the intermediate term.

The company I’m referring to is Nissan Motor (Pink Sheets: NSANY).

How can Nissan possibly outdo Toyota in earnings growth without comparable or better growth in sales? A key reason is Nissan’s corporate structure, which has included a partnership with French automaker Renault since 1999. Because of the partnership, both companies reap major savings by sharing product development costs, technology, warehouses and even motor vehicle parts. As a result, Nissan’s capital expenditures — typically around $1 billion to $1.5 billion annually  — are more than 30% lower than Toyota’s, as a percentage of sales.

To maximize sales, Nissan is seeking to position itself as a leader in environmentally friendly electric cars like the new electric Leaf model, which was introduced last December. Only about 7,600 of these cars have been sold to date, but demand has been brisk enough for this year’s sales goal of 20,000 to appear feasible and for Nissan to hike the price of the 2012 model by more than 7%. By early 2013, the company estimates it will sell about 250,000 Leafs. The car currently retails for just under $33,000, though consumers pay closer to $25,000 after a $7,500 federal tax credit for electric vehicles.

Nissan has also been ramping up production of gas-powered vehicles, including mainstream models. The fuel-efficient Versa is doing particularly well, as are high-end siblings sold under the Infiniti brand. Notably, although Infiniti was long a laggard in the luxury segment, it has gained traction in recent years with greater sales of the G37 and other G-series models, which have competed well with the BMW 3-Series and Mercedes-Benz C-Class. The increasing popularity of the Leaf suggests the high-end variant being developed by Infiniti should also do very well.

Importantly, Nissan has a leg up on Toyota in terms of production right now because it has been more adept at tapping global suppliers to overcome parts shortages related to the earthquake and tsunami. In the first half of 2011, for instance, Nissan boosted the number of vehicles it assembled in North America by 9.1%, whereas that number declined by 28% for Toyota in the same period. Nissan management plans to increase North American production capacity in the near future, either by building new factories or at least by expanding existing assembly plants.
 
The company is working to maintain a production advantage and expand globally by adding plants in Brazil, China and other emerging markets. Nissan already has a markedly stronger presence in China, for example, where Toyota is a latecomer, having focused more on North America and Europe over the years. The plan for China, says management, is to double annual sales to 2.3 million vehicles by 2015, up from 1.3 million in 2010. Toyota sold 846,000 vehicles in China last year, 35% less than Nissan.

Action to Take –> If you’re looking for an auto stock, make room in your portfolio for Nissan. The company is a prime mover in electric vehicles, which are getting more attention from consumers due to high gas prices, and could explode in number to about 10 million in the United States by 2020. To meet this projected demand, Nissan plans to continue investing heavily in electric car technology (four more all-electric car models will be introduced in 2012, for example). Strong sales of the Versa and other gas-powered vehicles and a cost-efficient corporate structure should enhance profits going forward, too.

Don’t be intimidated by the fact that Nissan trades on the pink sheets. As my colleague David Sterman mentioned recently, there are many global powerhouses that have chosen to list their shares in the United States on the pink sheets. Most major brokers allow you to buy these stocks, and if you have any questions about how to execute an order, a simple phone call to your broker will often do the trick.

P.S. — We found an obscure mining company that tossed back 19% in dividends last year (plus another 34% in capital gains). If you think that’s impressive, wait until you see this video…