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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Ford Is a Buy, GM Is a Hold, Says Contrarian Auto Analyst

Stocks in this article: F GM

DETROIT (TheStreet) --S&P Capital IQ analyst Efraim Levy is taking a contrarian view, picking Ford (F) over General Motors  (GM) when some prominent experts have been going the other way.

Jim Cramer said Monday to buy GM because of the lack of clarity regarding the future of Ford celebrity CEO Alan Mulally. UBS analyst Colin Langan recently picked Ford over GM because, he said, GM is now benefiting from introduction of its 2014 Silverado.

GM shares lately have benefited from the perception gap. Shares are up 34% this year and down 0.36% over the past five days. Shares closed Wednesday at $16.62, up 57 cents. Ford shares are up 28% for the year and down 2.41% over the past five days. Shares closed Wednesday at $16.62, up 6 cents.

On Tuesday, GM said its November sales rose 13.7%, while Ford November sales rose 7%. Ford said it will cut production from 784,000 to 770,000 through March to better match inventory to demand. Ford shares fell 3% on Tuesday, while GM shares fell 2%.

Nevertheless, in notes issued after sales figures were released on Tuesday, Levy rated Ford a buy and GM a hold. For Ford, he raised his full-year earnings estimates to $1.67 a share in 2013 and $1.92 in 2014, "including the impact of Ford's expectations for lower Q1 vehicle production." He left his target price at $19, 10 times his EPS estimate.

For GM, Levy left his target price at $39. He wrote that is "concerned about rising vehicle inventories." GM said its inventory increased to 96 days, while Ford's grew to 89 days.

In an interview, Levy said the two automakers have "a lot of similarities and both benefit from U.S. growth and global growth." But he noted that in determining his ratings, his first concern is valuation. He said GM is nearly at his $39 target price, while Ford has not reached his $19 target; the prices are based on earnings estimates.

Moreover, Levy said he discounts the speculation that Mulally could leave for Microsoft  (MSFT). "I'm in the camp that says Alan Mulally is not likely to go to Microsoft," he said. "But even if he does go, he's done a good job instituting a culture that will carry over, and succession will likely continue around what he has implemented."

Levy noted that on Tuesday he raised his Ford estimate by 4 cents for 2013 and by 7 cents for 2014. He said he might have raised it more but for the announcement of production cuts. "I do buy into the concept of not devaluing a brand by producing too much," he said. In the short-term, however, reduced production means fewer vehicles to sell to dealers.

Written by Ted Reed in Charlotte, N.C.

To contact this writer,
click here.

Follow @tedreednc

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

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