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Buy Ford and GM stock and make 5%

Want to make a five-percent return when 10-year treasuries are paying around two percent? Ford (F) and General Motors (GM) have solid balance sheets, strong cash flow, solid earnings, and growing markets. By all accounts, they are smart investments. But the market is down on these stocks. Why? Some of the stupid excuses include: They are cyclical companies The Detroit 3 have lost 3.5 million in sales since 2000 The world economy is shaky GM recently filed for bankruptcy Their markets have peaked They haven't changed their ways Let's take these criticisms one by one: They Are Cyclical Companies Yes, they are cyclical. Every company is cyclical. Every industry is cyclical. Some more than others, but not every company is immune from swings in the market. Banks used to be 'non-cyclical' leader, not anymore. Airline stocks are just as cyclical as auto stocks, yet they are trading at multiples greater than the auto industry. Why? And what accounts for the irrational stock price for Tesla (TSLA)? At least Ford (F) and General Motors (GM) make money and have positive cash flows. In fact, both companies have a net positive cash position. They have more cash on hand than liabilities. Auto sales in the United States hit a record 17.5 million vehicles in 2015. During the Great Recession, Ford (F) and General Motors (GM) cut their break even points to 10 million vehicles per year. Anything above an annual U.S. volume of 10 million vehicles is profit. And what a profit they make. Sales of Ford's F-150 continues to be the best-selling vehicle in the United States for over 30 years. Detroit 3 Have Lost 3.5 million in Sales Since 2000 Automotive News reports General Motors (GM), Ford (F) and Chrysler (FCA) have lost a combined 3.5 million vehicles sales since 2000. So how can they be making more money? Two big reasons – Fleet Sales and the UAW. Fleet Sales The Detroit 3 used to own car rental companies to keep their factories running. Ford owned Hertz (HTZ), General Motors owned all of National Car Rental and 29 percent of Avis, and Chrysler, the forerunner to Fiat Chrysler (FCA), used to own Thrifty Car Rental and Dollar Rent-A-Car. The Detroit 3 owned these rental companies to have a place to sell their bad product and keep their factories running. These were low margin sales, and in many cases, were money losers for the Detroit 3. They no longer own auto rental companies.

2017 Ford F-150 Raptor desert testing heats up

In case there was any doubt, Ford is taking the development of the second-generation SVT Raptor very, very seriously. The Blue Oval recently completed over 1,000 miles of testing in the boiling heat of the American southwest. Apparently, that mileage was accrued over a 66-mile route designed to mimic the torturous terrain encountered by racers in the Baja 1,000 off-road race. The prototypes, which were built from a mix of existing and next-gen Raptor components, were tested with "fast sandy washes, deep-rutted silt beds, steep climbs in deep sand, and slow meticulous crawls through tight trenches." Ford claims the new truck managed to run the circuit 25-percent faster than the current F-150 SVT Raptor, averaging 50 miles per hour while going as fast as 100 mph in stretches. That said, Dearborn didn't release any dedicated times, so it's unclear just how quickly the 66-mile stage was completed. We do know that durability was a big part of the testing. Ford claims each lap was completed by what sounds like a pretty significant jump, with the trucks ascending a steep ramp onto a two-foot plateau and then completing a step-down to level ground. We have to take Ford at its word here, though. "Steep" can mean any number of things, and we've no idea just how fast the trucks were hitting the ramp or how much air they got. Hopefully, the jumps were aggressive enough to prevent future frame issues. Still, Ford boasting about how rough the Raptor's testing is can be taken as a positive sign for fans of the next-generation of SVT's rugged pickup. NEW F-150 RAPTOR WRAPS UP INITIAL DESERT DURABILITY TESTING DEARBORN, Mich., July 7, 2015 – The 2017 F-150 Raptor – Ford's toughest, smartest, most capable off-road truck ever – recently completed more than 1,000 miles of testing in the southwestern United States. Over 1,028 miles of desert trail designed to parallel the Baja race course in Mexico, the 66-mile route featured a wide range of surfaces including fast sandy washes, deep-rutted silt beds, steep climbs in deep sand, and slow meticulous crawls through tight trenches. The truck topped speeds of 100 mph in places, slowing to 10 mph in others, for an average speed of approximately 50 mph. The 2017 Raptor is 25 percent faster than the current truck based on lap times. At the end of each lap, the new Raptor completed a tabletop jump consisting of a steep ramp up to a two-foot plateau, then a step-off back to level ground.

2015 F-150 kick-starts Ford sales

The F-150 had a middling year in 2014, and its sales dipped slightly as Ford transitioned to producing the all-new truck with an aluminum body. But with one factory humming, another on the way and a fuller stock of trucks, 2015 is already shaping up to be a different story. The F-Series posted a 17-percent leap in January, helping to push Ford sales to a 15-percent gain for the month. The F-Series had its best January performance in 11 years with sales of 54,370 trucks last month. Much of this strength comes from the new generation of the F-150. While many of the old model are still being sold off, Ford is rolling out the new version. Just five percent of the F-150's retail sales were the new truck in December, but it was up to 18 percent in January. The increase comes as the first factory that makes the truck, Ford's Dearborn facility, is fully back online. The other F-150 factory, in Kansas City, is still completing its changeover to build the aluminum-bodied truck, and that's expected to be finished in the first quarter of this year. Sales of the truck will still be "tempered a bit" until the Kansas City plant ramps up, Ford sales analyst Erich Merkle said. Ford expects to have a full inventory of F-150s by mid-year. To that end, the company announced plans on Wednesday to add 1,550 jobs to support the F-150, including 900 positions at the Kansas City factory. The remaining jobs will be spread out over sites in metro Detroit. The Dearborn and Kansas City factories collectively will be able to build more than 700,000 F-150s annually. The added headcount also means Ford has reached the maximum number of entry-level workers allowed under its pact with the United Auto Workers. About 300 to 500 employees at several plants in the Midwest will transition to a higher pay rate, and their wages will rise from $19.28 an hour to $28.50 an hour. The F-Series was Ford's hottest seller in January, moving off lots in an average of 12 days. The high-end models, the King Ranch and the Platinum versions, are moving slightly quicker. The average transaction price is also up $2,100 for the F-150 compared to January 2014. "We're really pleased with how the new one is doing on dealer lots," Merkle said. A larger stock of F-150s will allow Ford and its rivals to capitalize on low fuel prices, which have slowed consumers' interest in smaller vehicles.