Market Overview - Wall Street began 2026 positively after a significant bull run over the past three years, but U.S. stock markets experienced fluctuations in February due to concerns regarding artificial intelligence (AI) trade [1] - Investors are moving away from tech stocks amid growing worries about the downsides of AI stocks, leading to a continued selloff as fears increase about the potential of AI stocks compared to the substantial investments in the sector [1] Investment Strategy - It is advisable to invest in high dividend-paying corporate giants, which typically possess strong financial positions, robust business models, and globally recognized brand value, providing a steady income stream during market fluctuations [2] Stock Recommendations - Five stocks with a top Zacks Rank are identified as strong investment opportunities: - AngloGold Ashanti plc (AU) - Ford Motor Co. (F) - The Hershey Co. (HSY) - Rio Tinto Group (RIO) - BHP Group Ltd. (BHP) - Each of these stocks currently holds a Zacks Rank 1 (Strong Buy) [3] Company Profiles AngloGold Ashanti plc (AU) - Operates as a gold mining company with a focus on Africa, Australia, and the Americas, primarily exploring for gold and producing silver and sulphuric acid as by-products [6] - Expected revenue and earnings growth rates for the current year are 22.5% and 52.9%, respectively, with a 10% improvement in the Zacks Consensus Estimate for earnings over the last 30 days [7] - Current dividend yield stands at 3.36% [7] Ford Motor Co. (F) - Generated $187 billion in revenues in 2025, marking its fifth consecutive year of revenue growth, with the Ford Pro unit being a key growth driver [8][9] - Expected revenue and earnings growth rates for the current year are 0.3% and 39.5%, respectively, with a 3.4% improvement in the Zacks Consensus Estimate for earnings over the last 30 days [11] - Current dividend yield is 4.33% [11] The Hershey Co. (HSY) - Focused on innovation, supply-chain agility, and commercial execution, expanding its presence in the snacking category [12] - Expected revenue and earnings growth rates for the current year are 4.4% and 27.1%, respectively, with a 15.9% improvement in the Zacks Consensus Estimate for earnings over the last 30 days [14] - Current dividend yield is 2.62% [14] Rio Tinto Group (RIO) - An international mining company with interests in various minerals, including aluminum, copper, and iron ore, with operations in multiple countries [15] - Expected revenue and earnings growth rates for the current year are 10% and 19%, respectively, with a 9% improvement in the Zacks Consensus Estimate for earnings over the last 30 days [16] - Current dividend yield is 2.98% [16] BHP Group Ltd. (BHP) - Experienced a 1% dip in iron ore output, while copper production increased by 4% in the first quarter of fiscal 2026, projecting iron ore production of 258-269 million tons for fiscal 2026 [17][9] - Expected revenue and earnings growth rates for the current year are -4.1% and 29.1%, respectively, with a 0.4% improvement in the Zacks Consensus Estimate for earnings over the last seven days [19] - Current dividend yield is 3.18% [19]

Core Insights - General Motors (GM) and Ford are competing in the American auto industry, with GM currently showing stronger stock performance and fundamentals as they both transition towards electric and software-defined vehicles [1][2]. General Motors - GM is the top-selling automaker in the U.S. with approximately 17% market share, driven by strong demand for its core brands, particularly pickups and SUVs [3]. - The company is experiencing a recovery in China, with vehicle sales increasing by 10% year over year in Q3 2025, marking two consecutive quarters of growth [4]. - GM's software and services are significant growth drivers, generating around $2 billion in revenues year-to-date, with deferred software revenues rising over 90% year over year to $5 billion by the end of Q3 [5]. - GM is strategically involved in securing domestic battery materials through a joint venture in Lithium Americas' Thacker Pass project, positioning itself as a major lithium source in North America [6]. - The company has been shareholder-friendly, repurchasing over $3.5 billion in stock, reducing its share count by 15% year over year, with an additional $2.8 billion available for buybacks [7]. - The Zacks Consensus Estimate indicates a slight 0.3% sales decline for GM in 2026, but a 13% increase in earnings per share (EPS) is expected [7]. Ford - Ford is adjusting its strategy in response to slower EV adoption and rising costs, focusing more on hybrids, gas-powered vehicles, and smaller electric models rather than large EVs [8]. - The introduction of Ford's Universal EV Platform aims to reduce costs and enhance flexibility, with the first vehicle expected to be a midsize electric pickup starting production in 2027 [9]. - Ford anticipates a significant turnaround in its EV unit, expecting to reach breakeven by 2029, but this transition will incur approximately $19.5 billion in special items, impacting cash flow mainly in 2026 and 2027 [11]. - Ford Pro is a bright spot for the company, showing strong demand for Super Duty trucks and growing software and service revenues [12]. - The Zacks Consensus Estimate suggests a 3% decline in Ford's sales for 2026, while earnings are projected to increase by about 35% [13]. Comparative Analysis - GM is viewed as a more compelling investment heading into 2026 due to its focus on long-term profitability, narrowing EV-related losses, and strong momentum in software and performance in China [14]. - Ford's strategic adjustments are sensible, but the one-time charges related to its EV reset and delayed profitability timeline for its Model e present challenges [15]. - Valuation favors GM, trading at a forward earnings multiple of 7.14x compared to Ford's 9.55x, making GM the more attractive stock [16].

Core Insights - General Motors (GM) and Ford (F) are two leading American automakers that have shown resilience through economic cycles and are transitioning towards electric and software-defined vehicles, with both companies reporting better-than-expected results in Q3 2025 [1][2] Q3 Results Review - Ford's Q3 2025 adjusted EPS was 45 cents, exceeding the Zacks Consensus Estimate of 38 cents but down from 49 cents in the previous year. Consolidated revenues reached $50.5 billion, a 9.3% increase year-over-year, with total automotive revenues at $47.2 billion, surpassing the estimate of $42.7 billion [4] - General Motors reported an adjusted EPS of $2.80, beating the Zacks Consensus Estimate of $2.28 but down from $2.96 a year ago. Revenues were $48.59 billion, exceeding the estimate of $43.61 billion but slightly lower than $48.76 billion from the previous year [6] Growth Drivers - Ford Pro is a significant growth driver for Ford, supported by strong demand for Super Duty trucks and expanding software and service offerings, with paid subscriptions increasing by 8% to 818,000 in Q3 [5] - GM's software and services business is gaining momentum, with approximately $2 billion in revenues recognized year-to-date from offerings like Super Cruise and OnStar, and deferred revenues reaching $5 billion, up over 90% year-over-year. OnStar's subscriber base grew 34% to over 11 million [7] Outlook - GM has raised its free cash flow (FCF) and EPS guidance for 2025, forecasting adjusted automotive FCF at $10-$11 billion and adjusted diluted EPS at $9.75-$10.50, indicating a stronger 2026 [8][9] - Ford has reduced its 2025 EBIT and free cash flow outlook due to supply disruptions from a fire at Novelis' aluminum plant, expecting a fourth-quarter EBIT headwind of $1.5-$2 billion and a free cash flow impact of $2-$3 billion [10] Balance Sheet - GM had total automotive liquidity of $35.7 billion as of September 30, 2025, while Ford ended Q3 with over $54 billion in liquidity. GM has a lower long-term debt-to-capitalization ratio compared to Ford [11] Dividend and Buyback Appeal - Ford offers a high dividend yield of over 4%, targeting distributions of 40-50% of FCF, while GM's dividend yield is less than 1%. GM has repurchased over $3.5 billion in stock year-to-date, enhancing shareholder value [12][13] Valuation - Ford is trading at a forward earnings multiple of 9.74X, above its five-year median of 7.48X, while GM's forward earnings multiple is at 6.26X, slightly above its median of 5.54X [14] EPS Estimates - Ford's 2025 EPS consensus indicates a year-over-year decline of 41.3%, while GM's 2025 EPS consensus implies a decline of 3%, with both companies expected to see an uptick in 2026 [17][18] Investment Recommendation - GM is viewed as a stronger investment option due to its upgraded guidance, expanding software revenue, and disciplined cost management, while Ford faces challenges from supply disruptions and a projected EPS decline [19][20]

Core Viewpoint - Wall Street is losing confidence in Ford Motor Co. under CEO Jim Farley's leadership, with analysts questioning his focus and effectiveness in managing the company [4][7][9]. Financial Performance - The consensus target price for Ford's stock is $11.05, while it currently trades at $12.09, indicating a slight overvaluation [2]. - Ford's share price has increased by less than 11% over the past year, compared to a 14% rise in the S&P 500 and a 31% increase for General Motors [2]. Leadership and Management Concerns - CEO Jim Farley is criticized for not dedicating enough time to core business operations, as evidenced by his involvement in a summit unrelated to Ford's immediate business needs [5][6]. - Analysts express concern over Farley's focus on non-essential activities, such as his podcast, which does not contribute to managing the company or attracting customers [8][9]. Electric Vehicle and Recall Issues - Analysts highlight Ford's struggles in the electric vehicle market and significant recall problems as major reasons for their lack of confidence in the company [7]. - Ford's recall issues have been severe, with the company facing a recall of 1.1 million vehicles for rearview camera problems, further damaging its reputation [11].

Core Insights - Ford reported better-than-expected Q2 2025 results, with automotive revenues rising nearly 5% to $46.9 billion and EPS at 37 cents, surpassing estimates [1][8] - The company has increased its expected tariff impact for 2025 from $1.5 billion to $2 billion, with Q2 tariff costs amounting to $800 million [2][8] - Ford's updated full-year guidance projects adjusted EBIT between $6.5 billion and $7.5 billion, reflecting the impact of tariffs [7][8] Financial Performance - Ford Blue segment generated $25.8 billion in revenues (down 3% YoY) and $661 million in EBIT (down from $1.67 billion YoY) [6] - Model e recorded $2.4 billion in revenues (up 105% YoY) but a negative EBIT of $1.3 billion (wider than the previous year's loss) [6] - Ford Pro revenues totaled $18.8 billion (up 11% YoY) with EBIT at $2.3 billion (down from $2.5 billion YoY) [6] - Ford Credit generated $3.2 billion in revenues (up roughly 1% YoY) and $645 million in EBT (up 88% YoY) [6] Tariff Impact - Ford's gross tariff cost forecast has increased to $3 billion, with plans to offset $1 billion through mitigation efforts [2][4] - General Motors reported a $1.1 billion impact from tariffs in Q2, while Stellantis faced a $350 million tariff drag [3] Market Position - Ford's stock has risen approximately 10% year-to-date, contrasting with declines in General Motors and Stellantis shares [9] - The company is trading at a forward sales multiple of 0.27, significantly lower than the industry average of 2.7 [12] Outlook - The Zacks Consensus Estimate for 2025 EPS indicates a 38% decline YoY, with a projected growth of 12.7% for 2026 [14] - Ford's commercial division, Ford Pro, is experiencing growth due to demand for Super Duty trucks and software offerings [15] - The company maintains strong liquidity with $46.6 billion in total liquidity, including $28.4 billion in cash [16] Challenges - Ford's EV business is currently operating at a loss, and rising recall costs are impacting margins, with a $570 million charge related to a major SUV recall in Q2 [17] - The company has been leading the auto industry in recalls in 2025, which adds to its operational challenges [17]

Core Viewpoint - Ford is expected to report second-quarter 2025 earnings on July 30, with an EPS estimate of 34 cents and automotive revenues of $41.25 billion, reflecting a decline from the previous year [1][2]. Earnings Estimates - The EPS estimate has increased by 3 cents over the past week, but indicates a 27.6% decline compared to Q2 2024. Revenue estimates suggest an 8% decrease from the same quarter last year [2][3]. - For 2025, the consensus estimate for Ford's automotive revenues is $161.6 billion, representing a 6% year-over-year decline, while the full-year EPS is projected at $1.14, indicating a 38% contraction [3]. Sales Performance - Ford sold 612,095 vehicles in Q2 2025, a 14.2% increase year-over-year, driven by strong demand for trucks and hybrids. F-Series truck sales rose by 11.5% to 222,459 units, and the Maverick model achieved record sales of 48,041 units, up 26.3% [6]. - Sales of electrified vehicles increased by 6.6% to 82,886 units, although fully electric car sales dropped by 31%, while hybrid sales surged by 23.5% [7]. Financial Challenges - Ford is facing a $570 million recall charge in Q2, alongside pressures from EV losses and tariffs that may impact margins [6][8]. - The revenue estimates for key segments include $23.27 billion for Ford Blue (down 12.7% year-over-year), $1.38 billion for Ford Model e (up from $1.14 billion in Q2 2024), and $16.4 billion for Ford Pro (down 3.5% year-over-year) [9][10][11]. Market Position and Valuation - Year-to-date, Ford's shares have increased by 15%, outperforming both Tesla and General Motors, which have seen declines of 17.7% and 0.3%, respectively [12]. - Ford is trading at a forward price/sales ratio of 0.28, significantly lower than the industry average of 2.77, indicating a relatively cheap valuation [15]. Strategic Outlook - Ford's hybrid strategy is gaining traction as full EV adoption slows, with rising hybrid sales providing better fuel efficiency without the range anxiety associated with EVs [18]. - The Ford Pro division, focusing on commercial vehicles and services, is experiencing strong demand, particularly for Super Duty trucks, and is expected to be a key driver of future earnings growth [19]. - Financially, Ford ended Q1 2025 with $27 billion in cash and $45 billion in total liquidity, alongside an attractive dividend yield of around 5% [20].

Company Overview - Ford is planning to invest up to €4.4 billion ($4.8 billion) into its German operations to reduce debt and enhance competitiveness, as its German arm has €5.8 billion ($6.3 billion) in debt [1][2] - The investment aims to stabilize Ford's operations in Europe, which have been struggling due to rising costs, weak demand, and competition from Chinese EV makers [1][2] Financial Performance - Ford has been incurring losses in Europe for several years, leading to cost-cutting measures, including plans to cut 4,000 jobs by 2027 [2] - The Model e division, focused on electric vehicles, reported a loss of $5.07 billion in 2024, an increase from a $4.7 billion loss in 2023, with expectations of another loss of $5-5.5 billion in the current year [7] - The Ford Blue segment, which includes traditional gas-powered vehicles, is projected to see EBIT drop from $5.3 billion in 2024 to $3.5-4 billion in 2025 due to lower sales and product mix changes [8] Segment Performance - Ford Pro, the commercial vehicle business, experienced a 15% revenue increase to $67 billion in 2024, with EBIT rising from $7.2 billion to $9 billion, driven by strong demand for Super Duty trucks and Transit vans [9] - The company is focusing on software and service subscriptions as potential growth drivers moving forward [9] Liquidity and Dividends - Ford ended 2024 with $47 billion in liquidity, including $28 billion in cash, supporting its Ford+ strategy and cost-cutting initiatives [11] - The company offers a dividend yield of over 6%, significantly higher than the S&P 500's average of 1.31%, and plans to return 40-50% of free cash flow to investors [11][13] Market Challenges - Ford faces challenges from proposed 25% tariffs on Mexican and Canadian imports, which could increase costs and disrupt operations [14] - The company anticipates a steep decline in first-quarter 2025 adjusted EBIT, projecting it to break even compared to $2.7 billion in the first quarter of 2024 [15] - Full-year adjusted EBIT is forecasted to be between $7-$8.5 billion, down from $10.2 billion in 2024, with rising warranty costs and incentives further pressuring margins [15] Future Outlook - The Zacks Consensus Estimate indicates a decline in 2025 sales and EPS by 4% and 22%, respectively, but anticipates growth in 2026 [17] - Despite restructuring efforts and strong performance in Ford Pro, near-term headwinds such as weak demand and rising competition are expected to impact profitability [19]