Company name Ford Motor Company
Stock ticker F
Live stock price [stckqut]F[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Poor
EPS growth Poor
P/E growth Good
EBIT growth Poor

ANALYSIS

Confident Investor Rating Fair
Target stock price (TWCA growth scenario) $14.62
Target stock price (averages with growth) $19.6
Target stock price (averages with no growth) $18.34
Target stock price (manual assumptions) $13.26

The following company description is from Google Finance: http://www.google.com/finance?q=f
Ford Motor Company (Ford) is a producer of cars and trucks. The Company and its subsidiaries also engage in other businesses, including financing vehicles. The Company operates in two sectors: Automotive and Financial Services. Its Automotive Sector includes Ford North America, Ford South America, Ford Europe and Ford Asia Pacific Africa. Financial Services includes Ford Motor Credit Company and Other Financial Services. Ford North America includes the sale of Ford- and Lincoln-brand vehicles and related service parts in North America (the United States, Canada and Mexico), together with the associated costs to develop, manufacture, distribute and service these vehicles and parts. Ford Motor Credit Company includes vehicle-related financing, leasing, and insurance. Other Financial Services Includes a variety of businesses including holding companies and real estate. On January 15, 2011, the Company completed the acquisition of Cologne Precision Forge GmbH (CPF).

 

Confident Investor comments: At this time, I think that a Confident Investor can cautiously invest in this stock as long as the price is correct. Most of the fundamentals of this company are good but there are some concerns.

If you would like to understand how to evaluate companies like I do on this site, please read my book, The Confident Investor.

Apple [stckqut]aapl[/stckqut] has come under a great deal of discussion in the past week or so due to it’s ever expanding hoard of cash. Most companies hate having that much cash in the bank (or perhaps they are not fortunate enough to accumulate it) but Apple seems to really enjoy having a big savings account.

Since all the other bloggers that discuss companies and investing seem to have chimed into this conversation, I have to decided to do it as well.  Here are my suggestions:

  1. Use the cash like they have been. Apple uses its cash very effectively and very aggressively. As pointed out in PC Magazine, Apple effectively uses its cash to gain a technical advantage by locking up its supplier community in ways that their computer and device competitors such as Toshiba, Dell [stckqut]dell[/stckqut], and Hewlett Packard [stckqut]hpq[/stckqut] simply cannot afford to do. They are able to help manufacturers build their plants to create new components and lock in a pricing and supply chain that virtually locks out or delays the competition from the latest and greatest hardware advances. This competitive advantage means that they can continue to create large amounts of profit and build more cash.
  2. Increase R&D and rapidly expand their products with things that people want. Last year, Apple spent about 2.7% of revenue on R&D (and last year about 3.1%). I would like to see this grow to 7 or 8% of revenue. Yes, this is a big increase but Apple has a unique opportunity to solidify their presence in the markets that are important to them. Think what would happen if Apple had twice as many products that covered a broader spectrum of electronic experience.
  3. Increase their library. They should vastly increase their library of movies and video content to stream.  While they shouldn’t be stupid about the deals that they cut but they need to make deals with every movie and TV content holder out there. The consumer needs to feel that if they want to watch a professionally created video, Apple will always have the content. Making a ton of money in this area is not incredibly important (but don’t do it at a loss). What is more important is that they use this content to drive the sales of more multimedia devices and computers. While they are at it, they need to cut deals with the newspapers and magazines as well. Apple has had some short-sighted rules that have prevented the allegiance of those that create printed material – they need to put these rules aside.
  4. Streaming. They should make it so that they can stream to their subscribers more easily and more reliably than ANYONE else.  Supposedly they are investing in more data centers and that is a project that should be accelerated and expanded. Also, there are rumors of acquisition discussions with Hulu, this would be an acquisition that makes sense as it fits with their core offering today. Some commentators suggest that they should diversify by buying a company like Facebook but that would be ill-advised. Most companies that try to expand into vaguely related markets end up screwing up (think of EBay [stckqut]ebay[/stckqut] buying Skype).
  5. Integration with the cloud. They should make it so that integration between their products on your local network and between their products and the cloud is seamless and easy – in fact even fun.  Lion looks like it has great features in this area but they should take it to a new level. They would do well to expand that connectivity by putting a Windows application out there that makes Windows computers integrate easily and rapidly with Macs/iPhones/iPads. This doesn’t mean iTunes but instead iTunes on steroids – no cords – use the cloud, the private cloud, and the local connectivity connection of the computers.Read More →

DailyFinance.com has a great article on the new jobs outlook for the US that was reviewed by BloggingStocks.  I think that they only thing that is missing is the acknowledgement that is nearly impossible to get zero unemployment.  In fact, it would probably be bad for the economy to have zero unemployment!

What is the perfect unemployment rate? Ask 10 economists and you will likely get 12 answers.  Most of them will likely say a number between 4-7%. When the country gets below about 4% then entry level jobs become quite expensive and inflation is almost guaranteed to happen. Once you are above 7% then the country starts to feel real pain in that large ticket items are harder to purchase.

We are currently just under 10%, that means we are about 25-30% above our optimum level. While this is not great, it does have a significant advantage for those industries and businesses that rely on a large workforce to create product.

As the unemployment rate drops, pay a bit more attention to stocks of companies that create bigger ticket items (e.g. automobiles, planes, vacations, computers, homes). As long as the unemployment is a bit high, be careful of those big ticket items and look for companies that make low cost items or items of necessity or need a large, cheap workforce (restaurants, grocery, food production).

While I have not reviewed Kroger [stckqut]KR[/stckqut] on this site, it is a good example of a company that will slightly benefit from high unemployment or at least not be hurt as dramatically as others like Ford [stckqut]F[/stckqut]. Kroger recently released a fairly strong quarterly earnings report.

Company name Ford Motor Company
Stock ticker F
Live stock price [stckqut]F[/stckqut]
Confident Investor Rating Poor

Confident Investor comments: At this price and at this time, I do not think that a Confident Investor can confidently invest in this stock. It is not possible to confidently invest in a company that is not currently profitable.