This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Ford Shares Set to Rebound, Muhlenkamp Says

NEW YORK ( TheStreet) -- Shares of Ford (F - Get Report), which have fallen 8% this year while the S&P 500 Index is rising, will rebound on signs car sales are growing, says Ron Muhlenkamp, manager of the Muhlenkamp Fund (MUHLX).

Muhlenkamp also is bullish on auto retailers Asbury (ABG - Get Report) and Sonic Automotive (SAH - Get Report).

The $638 million mutual fund, which garners two of five stars from Morningstar (MORN), has returned 5.2% over the past year, putting it in Morningstar's 99th percentile. Over the past 10 years, the Muhlenkamp Fund has risen an average of 4% annually, better than 49% of its rivals.

Welcome to TheStreet's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.

What's it going to take to get shares of Ford moving higher again?

Muhlenkamp: If we are right that people will continue to buy cars, then Ford shares will work their way higher. There are at least a few more years in the expansion of auto sales so we are quite content to own Ford shares.

What about car sellers like Asbury and Sonic Automotive? Are they in the same boat as Ford?

Muhlenkamp: They have a ways to go. Car sales have been working their way back gradually. And while they do, of course, the cars already on the road get older. The reason why we own Sonic and Asbury is that they are auto retailers. You probably recall that GM and Chrysler both closed a lot of dealerships. There are about 30% fewer dealerships now. The auto-parts suppliers have already run-up quite far but the retailers have not.

Why do you believe large technology companies are so cheap right now?

Muhlenkamp: European banks and insurance companies were big sellers of big-cap technology in 2010 when the extensive problems in Europe were being revealed. Pressure has kept stocks cheaper than they otherwise would have been. When we look for values in the current marketplace, we are finding them in big-cap tech, particularly IBM (IBM), Cisco (CSCO) and Oracle (ORCL). That selling should be over now. That's our rationale for why they have stayed this cheap for this long.

Of all the natural gas plays out there, why do you like DuPont (DD - Get Report) the best?

Muhlenkamp: Natural gas is a feedstock for DuPont. Natural gas in this country is selling for less than half of crude oil on a BTU basis. In the rest of the world, natural gas prices tend to run with crude oil. So if you have chemical plants in the U.S. that are using U.S.-sourced natural gas as a feedstock, then you have a great cost advantage versus chemical makers in other parts of the world where they are paying more for their gas. That's an ongoing advantage.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
ABG $82.26 -1.01%
DD $70.98 -0.69%
F $15.91 -1.42%
LH $125.88 -0.17%
SAH $24.72 -0.72%

Markets

DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs