August 6, 2015
PORTFOLIO REVIEW
We are replacing Gilead Sciences Inc. (GILD) with Ford Motor Company (F)
Domestic automakers have underperformed the market since the beginning of the year
despite the increase in car sales that has occurred this year compared to last year. This has
created an undervalued industry that has both long term value and high projected growth
over the next year. Ford is included in a number of our UIT portfolios including our Defensive
Equity, Dividend, and Forward Looking Value.
Ford is seeing increasing demand for its F-150 model truck, as consumers are purchasing a
higher proportion of SUVs and trucks due to the lower cost of fuel. This shift in product mix is
beneficial to Ford as it is also a shift to higher margin sales. This is just in time for Ford to roll
out its new models of cars and trucks which is expected to be the largest number of new
models in the company’s history.
With a growth in earnings over the next four quarters of 65.8%, while selling at a price of only
7.5x next year’s earnings, we believe that Ford is undervalued for their growth potential
compared to the overall market. Ford also offers an attractive 4% dividend, making it an
investment in value as well as an investment in growth.
EXIT (SELL)
Gilead Sciences Inc. (GILD)
BUY
Ford Motor Company (F)
Market Cap: Large
Sector: Cyclical Consumer Goods Services
Industry: Automobiles Auto Parts
Earnings Quality Rank (out of 5): 4
Dividend Yield: 4%
Forward P/E Ratio (Next 12 months): 7.5
Price When Picked: $14.83 (closing price on 8/6/15)
BUSINESS SUMMARY
Ford Motor Company manufactures and distributes automobiles worldwide. The company operates
through two sectors, Automotive and Financial Services. The Automotive sector develops,
manufactures, distributes, and services vehicles, parts, and accessories. It offers vehicles primarily
under the Ford and Lincoln brand names. This sector markets and sells its products through
distributors and dealers, as well as through dealerships to fleet customers, including commercial
fleet customers, daily rental car companies, and governments. The Financial Services sector offers
various automotive financing products to and through automotive dealers. It provides financing
products, including retail installment sale contracts for new and used vehicles; and direct financing
leases for new vehicles to retail customers, government entities, daily rental car companies, and
fleet customers. This sector also offers wholesale loans to dealers to finance the purchase of
vehicle inventory; and loans to dealers to finance working capital and improvement of dealership
facilities, purchase dealership real estate, and other dealer vehicle programs. The company was
founded in 1903 and is based in Dearborn, Michigan.
Full disclosure: Sabrient produces portfolios for UITs and indices that are tracked by ETFs. At
any given time, we may have 800 of our top-ranked stocks in one or more of these portfolios.
Some of the stocks selected for the Earnings Busters portfolio may also be in one or more of our
UITs or indices portfolios. We will try to point out when a recommended stock is in one of our
UITs or indices.
Editor's Note: The Sabrient Earnings Busters newsletter is written by Daniel Vickers, analyst at
Sabrient. Daniel also assists in the selection of stocks and maintenance of the portfolio. He can
be reached at dvickers@gradientanalytics.com
Disclaimer: This newsletter is published solely for informational purposes and is not to be
construed as advice or a recommendation to specific individuals. Individuals should take into
account their own financial circumstances in acting on any stock selection made by Sabrient.
Sabrient makes no representations that the techniques used in these reports will result in or
guarantee profits in trading. Trading involves risk, including possible loss of principal and other
losses, and past performance is no indication of future results.