We’re buying 500 shares of Ford Motor (F) at roughly $11.36 apiece. Following Thursday’s trade, Jim Cramer’s Charitable Trust will own 6,500 shares of F, increasing its weighting in the portfolio to 2.63% from 2.44%. We are putting some cash to work Thursday, consistent with our discipline of buying in small increments whenever the market becomes oversold, according to the S & P Oscillator. The S & P Oscillator is a technical indicator that has guided us through oversold- and overbought conditions in the market countless times over the years. After a rough go for the markets over the past few days — a stretch of declines that has seemed to pour cold water over hopes for a Santa rally — Wednesday’s broader market declines finally pushed the Oscillator into oversold territory with a reading of minus 5.35%. When the Oscillator moves below minus 4%, it signals oversold conditions in the market, which could mean it’s due for a bounce. Of course, the Oscillator could become more oversold from here and the market could continue to drop. There have been several instances this year when we have seen the Oscillator reach more extreme oversold levels. However, we have an investment discipline of finding stocks to buy when the market becomes oversold — and indicator sentiment has gotten too negative and it’s time to go bargain hunting. As we add to our position in Ford Thursday, we are also upgrading our rating to a 1. From a stock perspective, 2022 was a throwaway year for the automaker. Share have declined about 45% year-to-date on concerns of inflation eating into profits, supply chain bottlenecks limiting supply and a pending slowdown in auto sales due to the slowing global economy. But from a company perspective, Ford has accelerated its transformation from internal combustion engine (ICE) cars to electric vehicles (EV). Management first laid out its EV acceleration plan in March when it announced it had reorganized the company into two distinct business units : Ford Blue (the ICE focus) and Ford Model e (the EV business). They then aggressively went to work to secure more sourcing of battery capacity and raw materials to support the scaling of the EV business . And one reason why there is so much confidence in the future of Ford EVs is a simple fact that it makes cars people love. The F-150 Lightning was recently named MotorTrend’s Truck of the year. Last year, the Mustang Mach-E won Car and Driver’s “EV of the Year” award. While Ford’s stock was a disappointment in 2022, it was a year of tremendous progress in the company’s transformation into a profitable EV automaker. But the macroenvironment hasn’t done Ford any favors of late. Automakers have a history of seeing their stocks sell off when the Federal Reserve gets ultra-aggressive in a rate-hiking cycle to slow the economy. Rising interest rates makes it harder to borrow money to buy a car. We saw some of this coming, explaining why we sold a chunk of our position on April 6 and downgraded our rating to 2 . This was our second big Ford sale of the year ( the other was on January 18 ), and both sales generated sizable profits for the Club. We’ll buy back a portion of those shares we sold at much higher prices. As of Thursday, shares of Ford have fallen about 27% from the sale we made in April and currently trade at a very cheap multiple of around 6.5-times consensus 2023 earnings-per-share estimates, according to FactSet. Some of the recent weakness can be attributed to worries that demand for EVs has softened worldwide, sparking price reductions across the industry. However, a recent price increase on the F-150 Lightning suggests to us its demand remains quite healthy. And with the semiconductor shortage finally flipping to glut in 2023, Ford’s overall shipping volumes should improve next year. Lastly, Ford’s hefty dividend yield of 5.35% pays for our patience in the business transformation and compensates us for the lack of near-term visibility in the economy. (Jim Cramer’s Charitable Trust is long F. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The U.K. has laid out plans to ramp up the number of electric vehicles on its roads over the next few years.
Coldsnowstorm | E+ | Getty Images
This article was originally published by Cnbc.com. Read the original article here.
You’ve tackled a difficult topic and made it easy to understand. Great execution!