Ford Motor (F)

Trouble with the traditional car businesses is that they have traditional combustion business competing with EVs. Difficult to transition, and hard to be both kinds of company. Will create more volatility in the long run. He's not saying run out and buy Tesla, but at least it knows exactly what it wants to be. EVs also rely on government funding.

Ford is valued at 1/10 the value of Tesla despite making much more cars. It's earnings are also much higher. It is at 16x earnings instead of Tesla at 500x earnings. All of the NA and European makers will flood the market with electric vehicles. It is hard to know who the winners are. A good bet.

EV stocks are making a comeback For years, Ford was losing money and selling boring cars, but now the F-150 is going electric and the F-150 is the biggest-seller in America. The EBITDA margin on the e-cars could be 8.5% vs. the current 4.5%. Ford plans to have 40% of its fleet to be EV in a few years. Their valuation makes sense compared to Tesla's valuation which makes zero sense. These EV stocks can be much, much higher.

The entire EV space has a big tailwind given regulation and infrastructure investment from Washington. To play this space, he likes market leader Tesla, or a broad ETF. Ford also looks good after their recent investor day.

Ford vs. GM This and GM are heavily moving towards e-cars. GM is bigger than Ford and more cost-efficient with far better operating margins. Long-term, GM will offer better products. Ford has been relying on the F-150, while GM has just surpassed them in total truck sales. He likes that GM is the majority owner of the Cruise self-driving business, partnering with Microsoft (https://www.reuters.com/article/us-gm-microsoft-autonomous-idUSKBN29O1MO). Ford isn't a bad option, but GM is the best.

They're committed to making cars around the globe in places done profitably. (The old Ford used to make them in places at a loss.) He likes them. Autos are trading at low and so has room to run. He also likes GM.

EVs were a red-hot sector just recently. For example, Tesla has tumbled from last year's highs. He still believes in Tesla, but take note. EVs are the future of the car industry. EV names with much less risk: Ford and GM. Yes, they are exposed to EV more than you expect. They are established companies with real earnings and rising balance sheets thanks to the boom in car sales. Sales of their gas-powered engine cars remain, sure, but they maintain these companies' businesses. Ford has some exciting EV cars coming, including the fully electrified Mustang and Bronco. Secondly, he predicts a small-business renaissance, and these businesses when they expand buy pick-up trucks--the F150 is the best-selling pick-up of all time (an electric version will surface in 2022). Ford's new CEO is taking a radical approach and is doing a fine job. Both stocks have had huge runs, but their valuations are still reasonable, around 9x next year's earnings.