While Ford Motor Company (NYSE:F) reported disappointing Q1 results in late April, now might be the time to BUY Ford (F).
Ford in the News
At the end of April, Ford Motor Company (NYSE:F) failed to meet revenue expectations of $34 billion, only bringing in $33.9 billion. However, now investors are choosing to focus on the fact that this year’s March sales were the company’s best in 8 years, and the launch of the company’s 2014 models will continue to bolster sales in the coming months. In addition to current domestic sales, much of the company’s future growth will be fueled by international growth in China. Right now, Ford Motor Company (NYSE:F) is the only automaker that has three of the top ten best-selling vehicles throughout the world, and with time this number may increase.
An Analyst Perspective
Seeking Alpha blogger Brian Gilmartin recommended BUY Ford Motor Company (NYSE:F) noting, potential growth in Europe. Gilmartin argued, “What makes the valuation case even more compelling is that with even modest improvement in Europe, which cost Ford between $0.40 and $0.45 per share in 2013 in terms of the pre-tax income loss, EPS growth could be improved markedly, and Europe is getting better.” And Gilmartin also pointed out that, “The current 3 year consensus for Ford’s EPS and revenue consensus is for 4% revenue growth and 15% EPS growth, and that is with Venezuela, the winter weather, and the shock of the 2014 launch costs in the current consensus.” Gilmartin has a +35.8% average return on the stock based on three recommendations.
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Brian Gilmartin’s Past Recommendations
In addition to his successful Ford Motor Company (NYSE:F) recommendations, Gilmartin has also recommended Micron Technology (MU) and Facebook (FB), helping him earn a +15.1% average return per recommendation, with a 68% success rate of recommendations.
Gilmartin recommended BUY Micron Technology, Inc. (NASDAQ:MU) in March of this year, after the company reshaped its business through its Elpida acquisition. Before the company reported Q2 ’14 financial results, Gilmartin noted, “In fiscal Q1 ’14, MU generated $1.5 bl in cash from operations, which hasn’t been seen in quite some time at MU, even if you look all the way back the halcyon days of late 1999, early 2000.” Gilmartin also pointed out that, “semiconductor manufacturing is a business with a high degree of operating leverage. Perhaps it can leverage Elpida’s facilities better, or perhaps mobile DRAM is less intensive than PC or non-mobile DRAM, but better cash-flow with lower capex and a better ability to maintain ASP erosion with bit growth is a winning ticket for this company and sector.” This recommendation has helped Gilmartin earn a+17.6% average return on the stock.
Gilmartin has also experienced success in the Internet sector, recommending BUY Facebook in January 2014. Despite a slowdown in user engagement, Gilmartin argued, “What does give me comfort and why we continue to hold the stock is the plethora of negative articles and commentary about FB’s user base, which in my opinion displays a sentiment perspective, that is the complete opposite of the mo-mo tech stocks of the late 1990s and thus makes me think that analysts and investors have underappreciated FB’s upside in what is really a fairly-valued market.” Gilmartin also stated that he thinks Facebook Inc (NASDAQ:FB), “is fairly valued near $73, and thus is trading at a 29% discount to what we believe is intrinsic value.” While popular sentiment was not hopeful about Facebook Inc (NASDAQ:FB), Gilmartin’s BUY recommendation helped earn him a +41.1% average return on the stock.
However, Gilmartin has not earned strong returns with all of his stock recommendations. In fact, his most recent recommendation about Whole Foods (WFM) has left him with a negative average return. On May 4, Gilmartin argued in favor of hanging onto the grocery chain, noting the company’s strengths in light of new competition. Gilmartin pointed out that, “From a market share and competitive analysis position, Whole Foods Market, Inc. (NASDAQ:WFM) has always been the 800 lb gorilla in the space. In the early 2000s competition was thought to be murderous from Target Corporation (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT) and Trader Joe’s and such, but it never made much of a dent in WFM’s growth. Frankly, WFM’s management team has always been first rate, the brand loyalty is very high, and WFM has killed it with private-label offerings too.” However, following disappointing Q2 results, the stock plummeted, dragging Gilmartin’s average return on the stock down to -10.7%.
Gilmartin recommends a variety of stocks in various sectors, but he has managed to earn a +68% success rate and high average return of +15.1% based on these cross sector recommendations.