Jim Cramer says he’s betting on Ford but still thinks Tesla is a buy

CNBC’s Jim Cramer said Tuesday that many on Wall Street have it all wrong when it comes to legacy automaker Ford.

“I think there’s real value here in Ford, more value than is captured by its $14 share price even with that 4.25% yield,” Cramer said. “Don’t get me wrong, you’ve got my blessing to own Tesla. Yeah, you can do that too, because it’s got incredible growth potential.”

Cramer said he’s chosen Ford over Tesla for CNBC’s Investing Club because he wants value, and that’s what he’s seen throughout his visit to the company headquarters in Dearborn, Michigan.

“So far it’s only been OK,” he said of Ford’s stock. “I think American ingenuity and innovation here at Ford are undervalued, undervalued versus Tesla and possibly even everything else made in America.”

Cramer said that some of Ford’s success may be beholden to whether the Federal Reserve decides to implement more rate hikes. Investors may feel safe putting money into a company as old and well known as Ford, but Cramer warns its stock will take a hit by any Fed tightening.

As for Tesla, Cramer said Wall Street treats it like a tech company that won’t be hit as hard if the broader economy suffers.

Perhaps that scenario isn’t fair, Cramer said, but he reminded viewers that when it comes to managing a portfolio, it’s not about “fair” or “unfair.” Instead, he values companies and CEOs that are able to adapt and turn a profit in any environment.

“If I’m right about Ford, this stock could get back to its high of $25, where it was in January of 2022,” Cramer said. “But if I’m wrong? I have to tell you, I think the downside — I’m calling it minimal. That’s right, minimal. Investing is all about managing risk and reward. At these prices, I’ll take Ford over Tesla any day, and believe me, I like them both.”

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Ford.