Ford Motor (F)

Don't buy Tesla instead. We're late in the auto cycle, but Ford's valuation is cheap. Ford will get into e-cars. Don't bail on this.

A class act in U.S. autos and the best one. That said, don't own auto stocks, because cars are in the late cycle with sales down in North America from their 2016 peak. Rising interest rates won't help. There's auto growth in Asia, but down in China.

Ford has discontinued most of its sedan models for North America. More significantly, Moody’s has downgraded Ford’s credit rating and put it on negative credit watch. He has seen this movie before. He thinks Ford will survive. He thinks the debt level is not onerous. However, Ford has eliminated its dividend in the past to survive and he thinks a prudent management will want to cut its dividend now, before a recession that really hurts this company. He thinks that at this time, there are better industries and better places to be. No auto makers show up in his screens at this time. Majors like Toyota would be a better bet than Ford, but at this time, this is too tough an industry. A recession will be a big negative for all these companies, but the stronger ones will survive. He thinks that in major cities, car sharing is making the two-car family a thing of the past. Millenials are also not owning cars to the degree that earlier generations did, partially because of car sharing and partially because of scooters and bikes. Global auto demand is declining.

Ford is a value play. Dividend yield of 5.7% and trades at 7 times earnings. The trouble with the auto industry is that the stocks have been cheap for a long time and it is difficult to figure out what the catalyst would be to move them. He thinks the industry is in disruption in some ways.

This company always seems cheap, but he is concerned of where we are in the cycle of the auto business. Most of the world’s growth is in China and they don’t have a good foothold there.

Not for long-term investors. They've had problems over the years coping with changes in the auto industry and this change will only continue. Ford doesn't have a plan to create more dominance in their area. They let go of their CEO less than a year ago, not a good sign.

The dividend is not in any immediate risk. He would suggest the technical chart is a signal that the market sees headwinds and he thinks the auto sector is at peak sales and near the end of the cycle. Yield 5%.

They are shrinking their product line to mostly trucks and SUV. It is kind of a risky move. The good news is if this works they will have higher margins. It is dirt cheap at 7.6 times earnings and a dividend yield of 5% with a 50% payout ratio. You can sell puts. If you get put in you get 5% dividend yield. Not a stock that can hurt you much at these levels.

An auto manufacturer and the worst performer of the group. When you look at tariffs on steel, it will affect the price of a car. The question is whether the auto companies can move the costs on quickly. He does not think Ford can pass the costs through. We are probably getting to the tail end of the growth in sales. Let it play out before taking an interest.

They are phasing out cars except for the Mustang and focus and will stick to trucks. Consumers are much more interested in buying SUVs and trucks. In the US, vehicle buying has peaked. You are better off buying the parts makers.

Well-run, but the auto cycle is prettty close to peak. Will we see a quick downturn? If you
believe in the auto cycle and like their dividend, then hold it, but he isn't buying now. They are
doing to adapt to e-cars, but it takes time.

He thinks this has been the poorest performer in the sector as it is still in recovery mode. It has more diverse operations than other manufacturers. You may see more pain before better gains. Wall Street would like to see the yield cut for debt reduction – don’t be surprised to see it cut. Yield 5.7%.

Trading a little off its BV of about $11, so it’s not horribly valued. If analysts are correct in their earnings, this company is worth an awful lot more than what it is trading at. The issue with automakers is, what is the outlook for the auto industry. The default rate on some loans is rising rapidly, which suggests people have got overextended in this area.

His preference is for auto parts companies rather than auto manufacturers. The large auto manufacturing company growth rates are rather flat but auto parts companies sell more and more parts into cars each year. LNR-T has been his preferred player in this space and he also has some MG-T.