What is the best buy right now? Ford, GM, Tesla

[ME_Andy]

I'm curious what everybody thinks the best stock to buy is between these 3. I think Tesla has the best future but it's too expensive for me to touch anymore. It's priced at something like 4x more than Ford.

Ford and GM have nice dividends (8% and 4%). Some of the downsides are that both companies barely made a profit last quarter. I think GM even lost money due to a union strike. The unions have basically neutered these companies in the USA. Ford probably won't be able to keep that dividend so high in the near future. If GM or Ford doesn't come out with a good E-truck, I could see bankruptcy in their future.

Ford's Mach E looks pretty good but I don't think they'll be able to compete with the Cybertruck on price.

GM's battery day was a little bit disappointing to me. It's good that they're investing in a big way and starting to reduce Cobalt in the batteries because it's so expensive. But, Tesla has already been doing that for a couple years. I think Tesla's battery day will be at the next level. I would be surprised if Tesla doesn't reveal a million-mile battery.

I like Tesla's approach to autonomy a little bit more for reasons I don't really want to get into here. It's not the right crowd. But, I think all three companies have a legitimate shot at Level 5 autonomy.

So, my question is, which stock would you buy? Let's normalize against Tesla:

- Tesla costs $1 and pays zero dividend
- GM costs 33¢ and pays 1¢ per year
- F costs 25¢ and pays 2¢ per year

I think I would buy Ford, but the prudent side of me says to hold off until they release the specs on their electric F150. Just to see if it's in the same ballpark as the Cybertruck.

[oil pan 4]

Not tesla. Their fundamentals suck. I really have no idea why it's up so much.
And when everyone else realizes this, it's going to drop like a rock.

[redpoint5]

If I wanted to gamble, I'd put everything on red. The smart investor chooses an index fund.

That said, future money isn't in automotive manufacturing. That's increasingly being commoditized and the industry is going to consolidate. Any manufacturer controlled by old unions will crumble under their weight because we've got a global economy. The restructuring of both Ford and GM will probably be solid. Future money is in autonomous driving, and GM has the strongest position of the 3 mentioned.

If I were a traditional automotive manufacturer, I'd have spun off separate EV and autonomous companies already to hedge against the impending manufacturing contraction.

Probably the smart money is in the Facebook of VR, whatever that is.

[Piotrsko]

Been in Ford since they hit like 40¢ a share back in 2009 (?). The dividend is nice, better if you have the reinvest option, buys a bunch of stock every quarter. Does wonders for cost averaging.

Other than that, meh.

[thingstodo]

I don't do individual stocks. I tried it once and was obsessed with checking the value every 5 minutes. I ended up making enough on the TSLA stock to cover my expenses in the purchase and sale .. but the stress was not worth any amount of money. I owned it for 6 months or so .. when it was worth $25 - $30 per share.

My sister-in-law tells me that the value of a stock has more to do with management style than actual value. She owns stock for the dividends and appears to have done well. I do get a text once every couple of months from here when she thinks a stock is under-valued and does buy more. But she does not appear to sell any of them.

If I were to buy - based on her advice - I would buy Ford.

[redpoint5]

Originally Posted by thingstodo

My sister-in-law tells me that the value of a stock has more to do with management style than actual value.

The market isn't rational, which is why it isn't predictable. The value is whatever people are willing to buy/sell for, as that's the definition of value.

I can't help but wonder how things had been if I had purchased Bitcoin at something like $0.10 back when I first heard about it. I thought about putting some trivial amount of money like $100 into it, but figured I'd rather not loose $100 on something that will ultimately be worthless. Could have made out like a bandit in the meantime though. Who'd have predicted a worthless currency would fetch 17,000 to 1 against the dollar? That's the irrational market at work.

[JSH]

Ford stock is selling for $6.74 per share and pay a $0.15 dividend. They had a 2019 EBIT of $570 million (down 82%) and a 1.7% margin. They have $37 billion cash on hand

GM's stock is selling for $30.10 per share and pay a $0.38 dividend. They had a 2019 EBIT of $5.48 billion (up 23%) and a 4.7% margin. They have $23.2 billion cash on hand.

Tesla's stock is selling for $724 per share. They had a 2019 EBIT of -$648 million and a -3.5% margin.

If I was to buy individual stocks (which I don't) I would go with GM. They have solid profits, a good dividend, and strong sales in the two largest auto markets in the world. They sell 8.4 million cars per year,

Ford will likely need to merge with another automaker as they are basically a US centric company selling trucks, vans and SUVs. They sell 6 million vehicles a year.

Tesla's financials make no sense. They sold 367,000 cars in 2019. Their two highest margin vehicles are 9 and 5 years old and past due for a redesign. (Sales of the S and X have dropped 52% and 28% in 2019.) The Model 3 is 3 years old a needs a refresh soon. Meanwhile they are busy trying to launch the Y and tool up the Roadster, Semi, and Truck. They are carrying a huge debt load...

EDIT: I'm of a strong opinion that any mainstream automaker will need to make 10 million cars a year of more to survive the next decade as an independent company. With the FCA / PSA merger there will be 4 such companies. (VW, Toyota, Nissan / Renault and FCA / PSA)

GM, Hyundai / Kia, Ford, and Honda are second tier

The little Japanese automakers will be absorbed. I suspect Mercedes and BMW will merge with each other.

[Piotrsko]

Last I heard, ford was talking to VW about joint ventures in EV vehicles.

Many of these asian makers are part of Mitsubishi heavy equipment.

[Fat Charlie]

Originally Posted by ME_Andy

Ford and GM have nice dividends (8% and 4%). Some of the downsides are that both companies barely made a profit last quarter. I think GM even lost money due to a union strike.

Originally Posted by oil pan 4

Not tesla. Their fundamentals suck. I really have no idea why it's up so much.

I would submit that a company losing money or barely making a profit, yet paying a nice dividend is more fundamentally flawed than Tesla, who makes a profit despite spending like a drunken sailor. Maybe that's why their stock price is so high- despite investing every dime they make or can borrow back into themselves, they post a profit.

[oil pan 4]

Tesla stock is over bought by the fan boys.
Once real competition develops it will crater.
Right now is their hay day, they own the market and the closest thing to being their only competition is the leaf.
Buy tesla and watch it almost daily for the next 5 to 10 years, since they don't pay dividends as your only chance is to make any money is sell before it goes off a cliff.
GM was offering employee pricing for everyone last year. Last time they did that they were filing for bankruptcy 3 years later. Definitely buy GM, but not now wait till they almost go under again.