Ford Motor (F)

Likes this company and thinks they are doing the right things. Balance sheet is getting better. Quality is certainly pretty strong. Trading at a 1.27 PEG ratio so not exactly expensive. Cars in the US are 12 years old on average so the cycle of picking up a new car is well past due. Likes this space.

Chart shows this is in the downward trend and is underperforming the market and below its 20 day moving average. Technically it does not look good. Seasonally though, auto stocks tend to bottom right around the end of February, beginning of March and go higher into May, when people are buying new cars. Wait for signs that the technicals are trying to bottom.

They indicated a struggle this year, particularly with Europe and they are having a hard time turning Europe around. US operations are doing better. They said that earnings were going to be flat this year and this disappointed the market. Auto stocks have had a great run generally. Earnings continue to grow and he thinks this will go higher. Another way you could play this is through the parts manufacturers.

Have done a great job of execution. If buying it here, you are going to do very well. Car sales have gone up in the last while so there is going to be a slightly decrease in growth in sales. Have shown that they can come up with some very good models and be very competitive. A much better buy than Chrysler or General Motors.

Bulls on the US auto cycle. More vehicles produced in China than in the US. You have to believe they are a buy due to the age of the average US automobile. China is going to be massive for this company. Bulk of revenue is still US. You should invest for 3-5 years and prepare for explosive growth in China. He likes the sector and where we are from a cyclical point of view.

Over the last several weeks, on their update call, they were trying to be a bit more cautious maybe and lower expectations that the street was having. She owns General Motors (GM-N) and of the 2, she would prefer it instead. Trimmed half of her position in this last week.

(Market Call Minute.) Feels all the car companies are going to do well. This will do well, particularly with its pickup trucks.

Major car manufacturer in North America with good exposure to China, which is a faster growing market. This would be a good play in the car market if you want an investment in this space. One of the problems she has with the OEMs (Original Equipment Manufacturer) is that Japanese manufacturers have a declining yen and can be more aggressive on pricing.

Auto manufacturers tend to benefit from the spring seasonal buying demand, March, April and May. Chart is not looking too optimistic. Seasonal strength comes up in a couple of months, which would be the time frame you would want to pursue this.

Announced their future revenue will probably be diminished, which triggered a decline in the stock. Market is pricing in what it thinks this company is going to make next year. If it is making $8 billion this year, and the stock price is anticipating $9 billion, and then they announce $7 billion, the stock price is affected.

Support auto companies have done particularly well. Key of AN-N as well as the peers. He is not too excited by them right now. If AN-N violates below the trend line, then stay away. Be cautious on the auto sector.

(Top Pick Feb 9/13, Up 19.21%) He tries to set targets. It was higher for this one until the other day. He still thinks it will perform. He will monitor for the next few weeks and then reassess if necessary. Balance sheet is fixed. They have good leadership. They did disappoint and you have to decide if it is short term bad news. He thinks it is short term.

Bought a $16 June/14 Option when the stock pulled back. How far out should he go and what determines that? When you have a stock sell off, that will often bump up the option premium because volatility will start to move up, so you have to be careful that you are not overpaying. Secondly, if you like this company, he wouldn’t think the options are terribly expensive. Going out 7 months would be quite comfortable for him.

Gave forward guidance that was not as wonderful as everybody had hoped for. 23 new vehicles for them next year which is a record. He is a big believer in phases of the market and phase 2 here is an uptrend that has broken. If you are going to be in for 3-5 years you will probably be okay but otherwise not.

Very positive environment for the auto industry globally. In North America you have a very old and aging fleet of domestic cars. Replacement factor is very high. There is a bit of inventory issue with the whole market, which is being worked off, but that is why it has been soft in the last few months. This is a buying opportunity.