The Experts’ Best Ideas For 2022

Within 38th annual MoneyShow’s Top Picks Report For 2022, one of the most attractive investment sectors will be companies related to the growing electric vehicle market. Indeed, of the 118 stocks in this year’s feature, only one stock earned the top buy rating from 3 separate advisors —Ford Motor Company (F).

Kirk Spanish, Fundamental Trends

We first invested in Ford Motor stock at single-digit prices, after I attended the 2020 Consumer Electronics Show, where I saw the Mustang Mach E and the company’s robots. Yet Ford is not just a car company anymore.

I believe that Ford will become a bigger EV manufacturer than Tesla (TSLA). Why? They have a built-in fan base. Millions of loyal customers will buy the Mach E instead of the Model Y, and the F-150 Lightning via cybertruck. I am waiting for the electric Ford Explorer which will debut in 2 or 3 years.

Meanwhile, there’s a lot more for Ford. Its “4th Industrial Revolution” technology was on the cutting edge of what made Ford a high-end manufacturing powerhouse. The proof is that they are able to pivot to making ventilators in 3 weeks during the Covid pandemic. This interesting aspect of Ford is completely unknown to investors and most analysts.

The company also sits on a large portfolio of valuable real estate. Again, investors and analysts do not value this part of the company correctly. Frankly, they do not value at all in the stock price.

With supply chains for high-end manufacturers returning to America, Ford real estate became more valuable in general. But there is more to the story. ICE vehicles require less production space. So, Ford’s real estate can be turned into other uses. Of course, some will be sold to make money.

Another opportunity for Ford real estate is to use their Industrial Revolution technology for joint ventures and new manufacturing opportunities. Think of this as maximizing the return on store floor space. I don’t know what deals are coming up, but their technology is too valuable for no more deals to come soon.

Ford has been improving their balance sheet over the years, including finding more favorable debt conditions, including pushing two-thirds of its maturities in the long term. The benefit is that they can spend massive capital expenditures on the EV transition without increasing debt over the past four years.

The company is now sitting on a $46 billion cash pile that equates to $11 per share. That was enough to return their dividends for 2022 and write off more high-yielding debt. I expect Ford to start buying back large amounts of stock by the middle of the decade. Frankly, Ford is a shareholder’s dream.

Market conditions, Covid and execution risk can certainly make stocks go down in the short term. I would view the decline in Ford stock as an opportunity to increase ownership or enlarge if you don’t have one.

Millennials have taken an interest in stocks, which is very important for future stock prices. I have a 3 to 5 year target price at Ford of $100 based on a future market capitalization of about $400 billion and 3.9 billion shares outstanding.

Alan Newman, Cross current

We are as excited as the next person about the development of the electric vehicle market. I have owned or rented several hybrids and EVs in recent years and firmly believe that in 15 years, it will be very difficult, if not impossible, to buy a new gasoline-powered vehicle. The future belongs to EVs.

Unfortunately for investors, the excitement level is very high, the field is full of EV companies that are overvalued by the market. We show soon Rivian Automotive (RVIN), which a few weeks ago was valued by the market at $150 billion, almost as much as Ford and General machine (GM) combined, while not selling a single vehicle.

We believe speculators are missing the mark by ignoring conventional automakers, who are already producing EVs and in fact, have experience dating back several years. In Ford’s case, their experience goes back to a whole decade, starting production of the electric Ford Focus in December 2011.

By 2023, Ford intends to produce 600,000 EVs annually, and has announced plans for a giant new electric truck (here’s looking at you, Rivian) and three new battery factories. This growth will make Ford the second largest manufacturer with the established goal of becoming the world’s largest EV manufacturer.

Ford has introduced four models of the ever-popular Mustang, starting at $43,895, competing with Tesla. In fact, you can build and price a Mustang EV today online but there’s a 20 week wait. Frankly, Ford’s full involvement in the EV market is quite interesting and we believe their experience is an asset that the stock market greatly underestimates.

Jon Markman, Strategic Advantage

Ford Motor — the Top Choice for the coming year — is a repeat business with big implications. Under Jim Farley, chief executive officer, the Dearborn, Michigan-based automaker is finally embracing electric vehicles. Ford started electrifying the F-150 in early 2020. Called the Lightning, the truck was supposed to launch in 2022 and in every way, it would be a big step up from its internal combustion cousin.

The Lightning will have more cabin and cargo space, better towing capacity, acceleration and contractor-friendly attributes like 11 120-volt power outlets. That means there’s no need to bring the generator to the job site anymore.

However, the big story at Ford is the Mach-E. Inspired by the Mustang, this SUV has been a hit wherever it has been launched. Like the Tesla, the Mach-E is a blazer, sprinting from rest to 60 mph in just 3.5 seconds. Unlike the Tesla, the Mach-E is visually stunning. This SUV takes the good looks of the famous pony car. And the vehicle was sold out everywhere. Dealers who manage to get supplies sell Mach-Is for a hefty $12,000 premium over the list price.

Farley said that Ford will increase production for the Mach-E to 200,000 units per year by 2023. He also claims, according to Automotive News, that by the end of 2023 the company will reach an overall EV production of 600,000 units.

While analysts worry about semiconductor shortages and global supply chains, Ford is turning from a longtime automaker to an EV company. Shareholders will benefit from all the new valuation metrics this transition requires. An increase in production, even from a small baseline will lead to higher prices. The same goes for new battery agreements, executive hiring from Tesla, and revealing EV models.

Ford shareholders are on the verge of getting the same investor love that launched Clear (LCID) and Rivian to nosebleeds. This is a completely new way of assessing business.

Lucid will produce 20,000 EVs by 2022 and 50,000 by 2023, according to a report in Reuters. Its market cap is $63 billion. Nonetheless, executives found no shortage of willing investors. The company raised $1.75 billion in November with the sale of convertible senior notes.

Market cap at Rivian, electric truck maker backed by Amazon (AMZN), even bolder. The Irvine, California-based company has no sales at this time, although preorders for its pastel-colored trucks have now reached 55,400. The market cap is $103 billion.

At just $88 billion Ford is a bargain. The stock is currently trading at 11x forward earnings and 0.7x sales. When the company makes the transition to EV in 2023, the stock should trade at 2.0x sales. Mathematics implies almost three times the current level.

Next year will be all about getting back to normal. For businesses this means a stable supply chain. Investors should pay attention to companies adapting during the global pandemic and remaking their models. Ford is ready to enter into a new assessment. So far this year, I expect a big rally for stocks.


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