Consumer Discretionary
The combination of Ford’s cash flows and cash on hand should be sufficient to meet all obligations including debt maturities through 2028. Furthermore, the firm’s large M/Cap and moderate recovery rate should allow it to access credit markets to refinance, if necessary. Despite this strong credit profile, credit markets are grossly overstating Ford’s credit risk with a 5-year CDS of 377 bps and a YTW on its 2025 bonds near 5.5%, relative to an Intrinsic CDS and YTW of 71 bps and 3.5%, respectively. As a result, credit investors are being over-compensated for the risk they are accepting and Ford’s bonds could make for a good addition in a corporate bond portfolio.
Edition: 136
- 27 May, 2022
Market Cap of Companies Over 10x Sales is Out of Control
The market’s greed for speculative tech stocks is creating fantastic opportunities for long-term investors - Kailash Concepts believe now is the time to be focusing on the cheapest stocks in the market - these companies generate FCF of 5%; trade at 1x sales; P/E ratio of 22x; ~10% operating margins and 3% dividend yield. In fact, they have far more sustainable business models and having grown revenues by 24% over the last three years offer growth at a reasonable price! Some of the top ranked S&P500 firms highlighted include Molina Healthcare, Albertsons, Allstate and Ford.
Edition: 119
- 17 September, 2021