Why Cramer Thinks Ford Will Emerge As Underdog To Outperform Recovery Favorites
What Happened: Ford CEO Jim Farley has said that the semiconductor shortage will impact the bottom in the second quarter earlier on Wednesday.
“When the expectations were highest — both yesterday and then 10 years ago ” — Ford got pulverized. Now they’re incredibly low, and that makes it easy for management to surprise to the upside,” said Cramer.
Referring to a CNBC celebrity stock-picking contest called the Stock Draft, Cramer expressed optimism that Ford would be a winner.
“If Farley’s right that the semiconductor shortage will ease up in the second half of the year, then Ford should win the [Stock Draft] contest hands down,” the “Mad Money” host said.
“I wouldn’t be surprised if the company can actually earn $5 a share … next year or the year after.”
Ford Shares closed nearly 9.4% lower at $11.26 on Thursday in the regular session and gained 0.44% in the after-hours trading.
Why It Matters: Ford expects to lose 50% of its production in the current quarter due to the chip shortage and a fire at a supplier facility in Japan.
Analysts are mixed on the outlook for the automaker, with BofA Securities’ John Murphy saying the company’s guidance may have confused some investors. Morgan Stanley’s Adam Jones pointed to multiple challenges causing uncertainty for investors for the rest of the year.
Last week, it was reported that the Dearborn, Michigan-headquartered automaker has plans to prolong production halt at five of its North American plants due to the ongoing global semiconductor shortage, according to the Wall Street Journal.
Ford shares have shot up 28.1% since 2021 began and appreciated 121.2% on a net basis over one year.
Last month, Nio Inc (NYSE:NIO) said chip shortage will hit EV production in the second quarter. A parts shortage also forced Tesla Inc (NASDAQ:TSLA) to close its Fremont, California factory temporarily.
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