Sell Your Automakers
Did you know that approximately 70% of the 21 million barrels of oil consumed each day in the U.S. is used for transportation? Consumers foot the costs every time they step up to the pump, which is part of the problem for U.S. automakers. Car companies have been hard-hit by soaring gasoline prices as more and more Americans are shifting to more fuel-efficient modes of transportation.
Last week, Ford (F) reported a 55% drop in sport utility vehicle sales from a year earlier. Its full-size F-series pickup – the best selling vehicle in the U.S. for 26 years straight – is off an unsettling 40%.
High gasoline prices have devastated the U.S. auto industry, since demand for gas-guzzling truck and SUVs has fallen off considerably.
In June, the following companies saw significant drops in sales:
- General Motors' (GM) sales dropped 18%
- Ford's (F) sales dropped 28%
- Chrysler's (DAI) sales dropped 36%
- Toyota's (TM) sales dropped 21%
Only Honda saw a small 1.1% increase in June sales. But no matter how you slice it, sales of trucks and SUVs are in a free fall, pressing vehicle manufacturers to offer incentives to move their existing inventories out and switch to more fuel-efficient models as fast as possible. Honda's got the head start, but not by much.
It saddens me to say this, but unload your automakers until further notice. My PortfolioGrader Pro tool rates them as D stocks. If you want to see if other stocks in your portfolio aren't making the grade, make sure to check out PortfolioGrader for FREE right now!
But more importantly than stocks to avoid are stocks to buy. After all, we're in the market to make money, right? Don't think the whole market is a bust just because stocks in Detroit are scraping the bottom of the barrel. My Blue Chip Growth Buy List has six stocks up more than 160%! If you want to know what stocks to buy now, subscribe to Blue Chip Growth today!
Carl Wappel, 07.15.08:
I have owned Ford products for over half my life, over 30 years. I am a big guy and money is not the issue. It is comfort. I love my Navigator. Like Clint Eastwood said, "They are gonna havta pry my cold, dead fingers off of that steering wheel before thay can take it away from me." It just doesn't matter how much gas it likes to drink. Although it is a good feeling to live just 10 minutes from work, shopping, medical center, etc. My GATOR is surely the only way to go on the highway of life.Abe Froehman, 07.10.08:
Can you imagine how bad GM and Ford would be doing if it wasn't for fleet sales? The only vans, trucks and police cruisers are purchased by city, county and state governments come from Ford or GM. If Toyota ever gets in on that pie, it's adios Detroit!Douglas Deckner, 07.10.08:
Turn around? These guys couldn't see what was right in front of their faces. What is scary is the old saying,"As goes GM, so goes the nation."Jonathan Cook, 07.10.08:
If anyone's been following these companies in the news, these declines have been a long time coming. I remember back in 2005, GM was already reporting major quarter losses. The company had announced that it was planning to cut 25,000 jobs and close several plants by 2008. Three years later, disaster strikes. Who knows, maybe bankruptcy will offer them more options...Susan P., 07.09.08:
I've noticed these car companies are now beginning to offer gas coupons along with the purchase of one of their vehicles. "$3 gas for life." Thought that was interesting.Yin-Li Kim, 07.08.08:
What about overseas sales? I've read several articles that suggest demand is picking up in places like China and Russia. And with the dollar as weak as it is, couldn't these automakers see a turnaround?Dave McCormack, 07.08.08:
I share your pain, Louis. I'm a car-lover myself. My poor HUMMER is sitting in the garage collecting dust. My wife takes me to work in her…HYBRID. It saves us a buck or two, but it's just not the same!What’s your take?
We want to know what you think! Email us your thoughts and then look for a special confirmation email in your inbox.
or send your comments to stockoftheweek@navelliergrowth.com
Previous
Stocks of the Week:
01.06.09: Riding the Small-Cap Surge This January
12.29.08: A Healthy, Growing Healthcare Pick
12.23.08: Defending Your Portfolio
12.16.08: The Best and Worst Stocks of 2008
12.09.08: Power Through the Recession with This Stock
- Stock Insights: The Just What the Doctor Ordered
- Investing Tips: My New Year's Resolution: To Make You Rich!
- Fed Update: Minutes Show Fed's Grim Economic Outlook
- Market Commentary: Crude Oil Creeps Up Over $50
- Q&A: Top 9 Questions for 2009
- What's Working on Wall Street: Fundamentals Return to Favor in 2009
Subscribers log in below for complete portfolios, specific buy prices, up-to-the minute buy/sell/hold recommendations and more! Not a subscriber? Sign up risk-free today.
| Video Demo |
| Stock | Symbol | Grade | |
|---|---|---|---|
| Apache Corp. | APA | B | BUY |
| Devon Energy C | DVN | B | BUY |
| EnCana Corp. | ECA | B | BUY |
| Hess Corp. | HES | B | BUY |
| Occidental Pet | OXY | A | BUY |
| Southwestern E | SWN | A | BUY |
| Stock | Symbol | Grade | |
|---|---|---|---|
| Abbott Laborat | ABT | B | BUY |
| Amgen Inc. | AMGN | A | BUY |
| Baxter Interna | BAX | B | BUY |
| Express Script | ESRX | B | BUY |
| Genentech Inc. | DNA | A | BUY |
| Novartis AG (A | NVS | B | BUY |
|
|
|
