In the automotive world, Tesla Inc. (NASDAQ: TSLA) is a market darling. After jumping 137% year-to-date, the electric vehicle (EV) maker has a market capitalization of more than $800 billion, more than 13 times that of Ford Motor Co. (NYSE: F).
But according to CNBC’s Jim Cramer, you’d be missing out if you ignored the Detroit-based automaker.
Cramer recently visited Ford headquarters and was impressed with what he saw.
“From what I saw today with my own eyes and what I heard from CEO Jim Farley, I think American ingenuity and innovation here at Ford is undervalued, undervalued. rated against Tesla and maybe even everything else made in America,” he said.
The Mad Money host thinks there’s “real value” in Ford.
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Risk and Reward Management
Ford shares soared 28% in 2023, but are still down from last year’s peak.
Cramer sees a glorious revival on the horizon.
“If I’m right about Ford, this stock could go back to its high of $25, where it was in January 2022,” he said.
Considering Ford shares are currently trading at $14.95, the price target implies a potential upside of 67%.
When it comes to investing, the focus is not only on finding substantial gains, but also on effectively managing the downside when things don’t go your way. And on that front, Cramer has good news.
“But if I’m wrong, I have to tell you, I think the downside – I call it minimal,” he said.
And that means if he had to choose between Ford and the hottest car stock on the market, the answer is obvious.
“Investing is about managing risk and reward. At these prices, I’ll take Ford over Tesla any day,” Cramer said. “And believe me, I like both.”
What’s Holding Ford Back
The Federal Reserve has significantly raised its benchmark interest rates to control inflation. And this has consequences for the automotive industry.
In 2022 — a year the Fed announced seven rate hikes — U.S. auto sales totaled 13.7 million vehicles, marking the lowest level since 2011.
“Remember that most cars and trucks are bought on credit, and the cost of financing keeps skyrocketing,” Cramer said.
He then asked, “When is the price high enough for most buyers, especially the small and medium-sized businesses that make up the customer base for the F-150 and the hugely popular F-150 Lightning? “
Even as the cost of vehicle finance has increased, Ford’s F-Series pickup remains an American favorite. In 2022, F-Series sales totaled 653,957 trucks, making it the nation’s top-selling truck for 46 consecutive years and the top-selling vehicle for 41 years.
That number still marked a nearly 10% drop from the 726,004 F-Series trucks sold by Ford in 2021.
Cramer’s housing
Since the Fed pledged to fight inflation, many have wondered when rates can finally come down.
Cramer suggests that “the biggest sticking point with the Fed” is the “ever-increasing price of housing.”
The problem is linked to an imbalance between supply and demand.
“We have a real shortage of houses in this country – maybe as many as 2-4 million,” he said.
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The US Census Bureau reported that there were 1.63 million housing starts in May, compared to 1.34 million in April.
Cramer says if homebuilders can “maintain this, maybe we can finally bring down housing inflation.”
“If we get a combination of high unemployment and cheaper housing, maybe the Fed can stop tightening without having to wipe out the whole economy,” he added.
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This article “At these prices, I’ll take Ford over Tesla any day”: Jim Cramer says there are 67% upsides and ‘minimal’ downsides for the Detroit-based automaker appeared in the origin on Benzinga.com
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