Do It Yourself Stock Investor

Ford Follows Walgreen To The Corner And GoPro Goes Subliminal With Anderson Cooper

by DIYSI
March 01, 2017

ford twitter and gopro brands

Ford Motor Company (NYSE: F) looks to keep following Walgreens' (NASDAQ: WBA) play book as it develops more Quick Lane service stores. These parts and labor stores can be stand-alone establishments with relatively small footprints; they can easily pop-up in new locations like a Walgreen's store. Quick Lane, for some Ford dealers is more prominent in ads than the car lot, which seems to be the case for one location in Idaho that operates the domain: QuickLane.org.

Having grown up in the auto collision repair business (even held a residence inside a shop) I can attest to the brand power of Mopar and NAPA auto parts. Mopar is owned and operated by Fiat Chrysler Automobiles (NYSE: FCAU) and NAPA by Genuine Parts (NYSE: GPC). If an investor wanted to invest in an auto service center business (directly or in part) they might skip over Ford Motor, except that now Ford will manufacture parts for all makes and models via its new Omnicraft label. This is a game changer. Now everyone can experience the Ford brand, subscribe for rewards points and be continuously propositioned to switch vehicle loyalty.

Find sales on Ford parts: Wheels, Tires and Accessories - JC Whitney

Look at some value metrics to decide on who offers the best entry point. The Free Cash Flow Yield, displays the cash on hand health of a company and makes it easier to compare with competitors. This metric gives an idea of how able the company can pay down debt or is ready to complete a M&A. The chart below shows that Ford's FCF Yield is superior to General Motors Company (NYSE: GM), FCAU and GPC. Additionally, it is Ford that shows a prevailing uptrend in improvement over the course of the past three years.

free cash flow yield for Ford and competitors

The temporal spat between President Trump and Ford Motor Company resulted in some promising news. There has been a revolving door of access for CEOs to the White House, Ford being included. One speculation is the spending on border control and other enforcement needs will demand new fleet purchases such as Ford Interceptors and other work trucks. This would help offset some projected declines in general consumer purchases.

The FCF Yield is much better for $F than $GM. How each fairs w/ #PresidentTrump is anyone's guess. https://t.co/mLm9AVsQ3y

— DIY Stock Investor (@DIY_S_Investor) January 14, 2017

There has been talk of a market pull-back and if this were to be the case, shorting or waiting on the sidelines with the Chicken Littles might be a good move. However, when Ford Motor Company's P/E ratio is compared to the other auto makers we see they are not of any extreme. Furthermore, with their dividend paying the better yield, any pull-back and price drop would likely make Ford's dividend yield a feeding frenzy and provide bottom support. Having already looked at the FCF Yield comparison chart, we can also conclude it is Ford that is in the best position to keep paying their dividend in the event of a pull-back.

ford P/E and dividend yield chart

GoPro & Anderson Cooper with Product Placement

For those still holding GoPro, Inc. (NASDAQ: GPRO) shares since the $80s PPS, this may be of little consolation. For new shareholders picking up GoPro during 52 week lows, welcome to the fold. This is a sport and lifestyle brand that remains debt free and advances into new markets (think Red Bull partnership).

As recent as February 26, 2017, GoPro had a ton of product placement and branding with Anderson Cooper on 60 Minutes. Not that this one time event is itself a bull signal, but that it represents how easily the GoPro products have become ingrained into our lifestyle and news coverage. In this 60 Minute special, JT Holmes is in the spotlight using three types of extreme sport equipment, speed riding being the premiere sport before a transition into his more notorious wingsuit. A must see, death defying event.

CBSNews Video https://t.co/FtbH1jPiXf via @cbsnews #JTHolmes $GPRO #SpeedRiding #SpeedWing

— DIY Stock Investor (@DIY_S_Investor) March 1, 2017

GoPro has done well with scaring a lot of shareholders out of their position. The three year chart shows R&D spending violently crossing higher over the declining cash and equivalents. This has lead to some oversold status and a pure misplaced bearish sentiment. The Karma (drone) and the Omni 360 video tech have been a bit slow out of the gate.

Gopro cash and equivalents with research and development chart.

The stock action has set a recent double bottom in the mid $8s PPS and rising past the 20 & 50 day small moving average. This is a possible launching point for the shares.

Gopro price FinViz chart.

What Happens In Twitter Stays... Goes Everywhere

Twitter, Inc. (NYSE: TWTR) is not the Las Vegas of cordoned misdeeds and tweets certainly don't go away. For some reason or another, it is also the preferred method of President Trump's personal news releases. Seeing how these have started to include direct disputes with the news media, Twitter has become ring-side seating for said fights. This is a great driver for reader traffic and ad click revenue in my opinion. I'm also pleased with the last NFL season that had live streaming games and the recent PBS Newshour live stream of President Trump's first address to Congress.

FAKE NEWS media knowingly doesn't tell the truth. A great danger to our country. The failing @nytimes has become a joke. Likewise @CNN. Sad!

— Donald J. Trump (@realDonaldTrump) February 25, 2017

If an investor wants to buy shares of a social media app that is also used as a news feed, Twitter, Inc. shows the better value in price to sales ratio. Snapchat (NYSE: SNAP) has a projected 51.9 p:sales ratio while Twitter, Inc. is at 4.6. S.A. Contributor, Dave Dierking had nicely pointed out, "Snap is looking a little expensive."

Snap is looking a little expensive. $SNAP pic.twitter.com/gVK59lQZEm

— David Dierking (@David_Dierking) February 26, 2017

A Brief On Potential Risks

Conclusion

These three quick picks are rated a buy: F, GPRO and TWTR. They each have something compelling within their respective sector and show an ability to compete. The risks are present, however the PPS for each one, the valuation, presents a fair risk to reward scenario.

*****

Disclosure: I am/we are long F, GPRO.