This Day On The Street
Continue to site right-arrow
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Buy Apple and Ford -- Sell Amazon and Trade Sirius

NEW YORK ( TheStreet) -- Investors have digested the news of Sirius XM's (SIRI - Get Report) Ford (F - Get Report) expansion of its used car program, and beyond the crickets in the background there is little else.

Ford finds itself in the Wall Street doghouse, trading near this year's lows. Ford has strong technical support, just under $10 a share, and strong fundamental support with a price-to-earnings ratio of 5.8.

Ford finds itself in the Wall Street doghouse, with one seller saying only the flagship F150 hard to keep in stock. Still, expectations and consumer interest in the new Ford Escape are high.

With shares trading at $10, Ford's dividend yields 2%. Even with recent price weakness, shorts have not piled on expecting the shares to fall further. Short interest is relatively modest at 3.9%. If short interest moves above 4.5% to 5%, I will have to re-evaluate why the "smart money" is expecting smaller profits.

Trucks are Ford's most profitable segment, and it's no wonder why. Ford is the No. 1 truck company. I contacted Curt Beilke, who operates Ford dealerships in northern Wisconsin. According to Beilke, Ford super-duty truck sales are not as strong as he would like to see, but the flagship F150 is hard to keep in stock; expectations and consumer interest in the new Ford Escape are high.

At $10 or less per share, I believe Ford is a value buy. I especially like shorting August $10 strike put options for 70 cents or more in the next couple of weeks. Selling put options carries less risk than buying shares outright. If Ford moves lower, resulting in shares put to me, I will start with a cost basis of $9.30 or less.

On May 18, I wrote Sirius' relatively safe buy zone is $1.80 and that anything over $1.97 is a good exit price (at Tune out Facebook: Tune in Sirius, Pandora). I believe these two price points represent the optimal trading channel at this time.

For a more aggressive approach, $1.85 as the top of the buying zone may be appropriate, albeit using smaller size. Buying at $1.85 will offer more opportunities, but the greater risk requires using a smaller size because the risk reward levels are less rewarding.

I don't expect Sirius to offer much more than a trading vehicle. Current investors who don't want to sell can still profit from the price moves.

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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!
AAPL $130.42 1.26%
AMZN $384.80 -0.15%
F $16.38 -0.79%
SIRI $3.90 0.52%
FB $80.41 1.07%


DOW 18,214.42 -10.15 -0.06%
S&P 500 2,110.74 -3.12 -0.15%
NASDAQ 4,987.89 +20.7530 0.42%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs