Every year CNBC does this fabulous Stock Draft contest where we have notables from all walks of fame vying to discern the stock that will be up the most by the Super Bowl. You have an incredible list to choose from, all sorts of great growth stocks, classic speculations and commodities like oil and gold. Oh, and there's that nutty stock GameStop (GME) and even the ETF that represents the best picks of the once red hot fund manager, Cathie Wood. Eclectic, exciting and competitive to the max.
I think that a contest like this requires you to pick a temporarily down on its luck stock that could have a resurrection by the time we get to the Super Bowl.
Which is why I am going for the Ford Motor Company (F) . Last night Ford reported and it was one of the greatest numbers I have ever seen Ford report. It made me wistful for the day 10 years ago when I visited the fabled River Rouge plant to meet with then CEO Alan Mulally and I couldn't have been more excited about the company's prospects. I predicted that Ford, which was at $18 a share, could earn as much as $5 a share and the darned thing was selling for less than 4 times earnings.
I was wrong. Dead wrong. In fact the stock, which I had been bullish on since $4, didn't trade much higher than our field trip as a variety of troubles kyboshed my forecast.
Now here we go again, with the stock still nowhere near where it was 10 years ago, one of the few stocks in the S&P 500 which hasn't been able even get near its 10 year top.
So why select it as the stock to own between now and the end of January?
Simple, unlike 10 years ago people aren't looking for anything from Ford, not after last night when the company said that it would lose a gigantic amount of earnings and sales because of this chip shortage. You're talking about possibly $2.5 billion in lost sales.
The estimates have come down to about $1 per share for the year, a sign that the expectations have been crushed.
So let's think about this. When the expectations were highest the stock got pulverized. Now that they are incredibly low I think you have to select Ford as number one.
Somehow, if you can, I want you to asterisk the chip shortage. I think that Ford's product lines are pretty much sold through, a rather remarkable circumstance. Secondly, the company no longer is making cars and trucks all over the world, especially in markets like Latin America which have crushed profitability. I am so use to hearing how great the U.S. is only to see earnings wiped out by markets that we knew were historically terrible. Oh, and Jim Farley said that he thought that the second quarter would be the bottom, the nadir of the chip shortage and it will be all up from there.
That means you are buying this stock at what might turn out to be the low going forward. It's certainly been de-risked and because so many analysts bagged it, the stock's suddenly out of favor.
Remember this is a contest that will cover several quarters before we reach a conclusion. If Farley is right and the chips fall, then I am going to win this contest hands down. That's because, once again, I think that Ford can earn $5 a share next year even as so many have given up on it entirely.