Turnaround Investing Blog

George Putnam, one of the country's leading turnaround and distressed investing professionals, shares his timely insight on the economy and turnaround investing opportunities.

Automobiles & Components

Ford Motor Company vs. Tesla--Seriously?

as of November 10, 2017

Price: Tesla $302.99 | Market Cap: $50.9 billion

Price: Ford Motor $12.01 | Market Cap: $47.0 billion

 

Without bold visionaries, we’d all probably still be living in caves. Tesla, led by the clearly bold and visionary Elon Musk, is without a doubt one of the most innovative companies in any industry today. Its aggressive drive to create an entirely new large-scale car production company with all-new designs, electric propulsion systems, dealer network, refueling infrastructure and software, has the entire 90-million-units/year global light vehicle industry scrambling to catch up.

The Tesla dream is not hard to imagine. Overall demand for electric cars looks poised to grow indefinitely, perhaps taking as much as a 10% share of the light vehicle market, or nearly 10 million units, over the next decade. It’s easy to see how Tesla’s cars could lead the charge.

Putting rough numbers on this dream, Tesla’s stock could be worth nearly double its current price.

We are convinced that electric cars will be a big part of the car industry’s future. And, clearly, Tesla’s story is full of the same bold vision that led the cave-dwellers to migrate into the open fields and build thriving villages on their way to a better civilization. But as not all pioneers survive, we’re not yet convinced that Tesla will, either.

Tesla is pressed by an age-old nemesis, which makes is financials and operations fragile. Why is Ford even in this discussion? Because Tesla’s nemesis is working to Ford’s advantage. Subscribe to The Turnaround Letter for additional stock analysis detailed in the full article.

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Amazon = US GDP 1970

Amazon joined Apple in reaching a $1 trillion market capitalization. $1 trillion is about the same as the total value of New York City property and the total value of loans at JP Morgan, the nation’s largest bank in terms of assets. Jeff Bezos’ $160 billion stake would place him (personally) as the #33 largest company in the S&P 500 in terms of market cap, next to Coca-Cola, Disney and Netflix. We aren’t bold enough to predict whether the shares will continue upwards or if they are in a bubble reaching maximum inflation. Setting aside for a moment their investment prospects, let’s admire the truly remarkable milestone that these two companies have reached. Read More.

EV/EBITDA: What Is It & Why Are We Using It More?

In reading recent editions of The Turnaround Letter, you have probably noticed that we are increasingly using EV/EBITDA as a valuation measure, rather than the better-known price/earnings multiple.  We thought it might be useful to describe this measure and why we like it.

Read More.

Turnaround Letter Stock Pick Named Top Performer of 2017

 

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What Last Year's Top Stock Pickers Are Buying in 2018

 

This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.

 

George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."