In this video, I talk about the latest earnings report as well as break down the 4 Ms.
- 02:55 – Meaning / Business Model
- 07:13 – Moat / Competition
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In this video, I’m going to review Ford. So, for those of you who like investing in electric vehicle manufacturers, we’re going.
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To take a closer look at Ford.
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We’ll also touch on Tesla and we’ll also look at Volkswagen and a few other manufacturers as well. Let’s dive in.
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So, per usual, whenever we look at.
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A stock, we like to look at the 4Mss. We’ll start with a margin of safety by looking at the math part of investing. We’ll use Tykr for that and then.
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We’Ll take a closer look at the.
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Meaning mode and management. So, first off, when you log into.
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Tykr, you can see that Ford doesn’t look like the best investment off the bat.
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It’s currently listed as overpriced. Its score is eight out of 20 and its margin of safety is 44%. Ideally, we like to see on sale stocks. So they’re green. And on sale means that a stock has a point, or its points are ten or higher, and margin of safety is 50% or higher. So you can see here the stock is pretty close, but not quite there.
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Let’s take a closer look at the.
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Financials to see what’s going on. So when you take a closer look at the revenue, you can see it’s pretty flat over the last few years. But where things get interesting is that net income there’s a significant jump.
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It went from like negative 1.2 billion.
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Up to the most recent year.
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It’s 17 or close to 18 billion, which is a really good sign for this business.
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So they are becoming more profitable.
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Where things are a little boring is when you get down to the cash flow statement. You can see cash flows are pretty flat last few years, except it made.
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A significant jump in 2021 and then.
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It’S kind of leveled off thereafter. So that doesn’t really reflect well in that score. And then you look at the balance sheet, this is where things are quite boring. You’re looking at really flat assets. We like to see assets and equity increasing. We can see equity has increased a little bit, which is a good sign. But the liabilities and debt which we like to see decrease, are pretty flat in this case. Keep in mind, with auto manufacturers, there’s.
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A lot of equipment, there are warehouses, you’ve got a lot of materials. Think about the metals, the plastics, aluminum that goes into building products. There’s a lot that goes there.
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Of course, you’ve got your payroll as well.
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So a lot of liabilities, a lot of overhead with this business. You can see here, looking at the overall financials, a little room for improvement, especially with that revenue. We like to see sales increasing. Cash flow statement could use some improvements there.
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We want to see cash flow increasing.
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And then with the assets and equity.
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We want to see that increasing a.
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Little more year over year.
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So overall you could look at these.
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Numbers and say, all right, I’m going.
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To pass and move on to another business or another EV. But this is why we look at more than just the numbers. We look past the numbers.
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We’re going to look at the business a little bit here.
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So this is where things get really exciting with Ford. If you’re an investor in Ford or let’s say you own an ETF or index fund that has Ford in the portfolio, this is going to provide some good news on the business. So with the meeting, we’re going to first touch on some of the recent news. So looking at the I found an.
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Article here with Yahoo Finance, and they.
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Talked about two vehicles under the Ford umbrella. You got the Ford F 150 Lightning and the Mustang machine vehicles are doing.
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Really well with sales right now.
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The Maki is competitive to, like, the Tesla three quick benchmark here. The Mackey is like, I think, around $43,000. Starting price, US.
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And then the Tesla Model Three, I think it’s about 46. I got curious here to see how fast are these vehicles. So I think the zero to 60 on the Tesla three is 3.2.
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It’s not quite as fast, of course, as the plaid. We all know that.
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I think it’s like less than 2 seconds or something. It’s pretty quick or at least the fastest out there.
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When you look at the Mustang, instead of 3.2 seconds on the Model three, the Mustang mach is about 3.5 seconds.
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So pretty close. So pretty close.
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With the price and with the speed.
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There, if you’re kind of a gear head, you’re going to pay more attention to those.
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How fast is this vehicle? But where things are really fun is with that Ford F 150 Lightning.
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So I’ve got another link, and this.
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Is on our site. You can go to our stock reviews. It’s under education, stock reviews and Ford. I’ve got all these links within. You can see I linked to a video from Marcus Brownlee. He’s a YouTuber, and he did a really fun video giving all the details within the Ford F 150 Lightning.
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And I’m just going to kind of.
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Summarize a few of those I thought were pretty cool. So the Ford F 150, if you didn’t already know the last 40 years, it’s the top selling pickup truck.
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And a big part of that is.
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You have a lot of contractors, like labor workers. You’ve got your plumbers, electricians, carpenters, people who are out there in the job site. They don’t have an office.
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They work out of their vehicle.
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Well, to kind of piggyback off a comment here from Jim Farley, the CEO, he said that they want to make vehicles that are more than just products that get you from A to B. They want to make like, actual software platforms. So what they’re doing is making the ergonomics of the vehicle and just how it’s used, a lot more versatile. So check this out, the Ford F 150 Lightning.
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It’s got plugs everywhere, whether it’s for.
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Computers, tablets, cell phones, whatever.
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But it also has plugs for if.
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You’Re running equipment like, let’s say you’ve.
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Got table saws or you need to.
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Charge up your equipment, you can do.
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That right from the truck. It has a battery underneath. The truck has enough capacity, apparently, that can charge your home. So this gives you an idea of how versatile it can be used. It can be charging a lot of.
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Different equipment, a lot of tools and whatnot to run your business. Let’s say you’re an independent contractor.
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You have your own business, your own LLC. And really, you’re going to invest in that truck. You’re going to write it off. And there you go. You got your mobile office. The interior is pretty cool. They have a foldout desk. Like you could be sitting there. You get your steering wheel, and it kind of folds out here.
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So it makes it a lot more.
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Comfortable to use a laptop.
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I know a lot of us in.
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The vehicles we drive. How do you use a laptop in your vehicle? It’s not the most comfortable way to work. So Ford was really thinking about that, how do I make this more comfortable for the end user?
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I thought that was brilliant.
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And just a lot of the little details in the vehicle, including like the.
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Shift stick or it’s automatic transmission. But anyway, that folds down, of course, for the desk.
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You get a 15 inch monitor right there and a bunch of other bells and whistles. I was really impressed by Ford. You look at their vehicles and how they compare, and we’ll get into the.
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Competition in a little bit.
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But they are making the right steps here. Being a competitor to the big players.
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In the market, which I would say.
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Would be Tesla on the US. Side and then on the UK side, you’ve got Tesla as well as Volkswagen that are making a big impact. When you look at Europe, the last few quarters, and I’ve seen this kind of rotate, who’s the top seller?
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Is it Tesla?
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Is it Volkswagen? And it’s been kind of rotating right now. I think the latest quarter Tesla did beat Volkswagen, but that’s something to keep in mind, especially for cars. For trucks, though, I was doing some homework here. Rivian, which Ford owns, part of that business along with Amazon. Rivian has their own trucks, too, but I would say they’re not even close to where this Ford F 150 Lightning is. So I say from a worldwide perspective, if you’re looking for an EV, especially.
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For the people out there who are.
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Buying trucks, nothing is really competing with.
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Ford, which is a pretty exciting place to be.
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As we continue through some of the news here, this was interesting. So Ford plans to invest $50 billion, produced more than 2 million EVs by 2026. That’s quite aggressive. But it’s pretty exciting to hear. They want to be the number two player in the EV market behind Tesla. Tesla is, of course, doing a great job. They have a lot of cool cars, but the competition is stepping up. For those of you who invest in Tesla, just want you to be aware of who’s out there. You got Volkswagen really taking the EV market in the EU. And then if you got Ford, if you got GM, of course they’re going to be producing a lot of vehicles.
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And then I just wanted to list.
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It a few brands here in China that are taking away market share from Tesla. You got Neo Lito and Xping, I think is how you pronounce it. I haven’t even heard of it, but those are all primarily car manufacturers, not so much trucks. You look at this business, you look at Ford. Yes, the Mac is a pretty sweet car and competitive to a lot of.
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Cars out there, especially the Tesla Model Three.
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But nothing really competes with that F 150 Lightning. Here’s another interesting stat, and this is really exciting for those who do plan on investing for the long term in the EVs. So I found an article here from New York Times that stated that right.
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Now, 3% of auto sales are currently Echo electronic vehicles.
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Just 3%. And we expect to see the shift like EVs surpass gas vehicles in 2040. So this shows how long this runway is. It’s going to take a long time. So if you’re getting any EV’s, my recommendation is trying to find businesses that have really strong financials, and they have some strong competitive products. Obviously, what comes to mind, you’ve got.
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Tesla, but of course, Ford.
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This is one reason why I’m putting out this video. Ford is something to put on your radar. Volkswagen is a strong company. They already have a global footprint, so.
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Those are the big players.
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So when looking at the meaning, I.
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Would say, hey, we check that box.
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When you look at the mode, that’s also looking really good too. Nobody’s really competitive with that F 150 Lightning.
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I think there’s a lot of good.
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Things in store for Ford over the next five to ten years. The big question is, can they keep up with the manufacturing demands? I mean, that’s a bigger vehicle. So there’s a lot more metal, plastic, aluminum that goes into the construction.
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They really need to be dialing that up.
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And I’m thinking they’re probably putting together.
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Sites or at least production plans that.
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Are strictly focused on that truck alone.
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Let’s jump to the management. I wanted to spend a little time here, and this is a fun story. I was recently listening to a podcast from Masters of Scale.
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I listen to Motley Fool Money. I think they’ve got a great podcast. But if you’re an entrepreneur, you like building businesses.
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You want to hear other people build.
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Businesses or how you kind of grow companies, masters of scale is awesome. And this episode, they interviewed Bill Ford Jr. So he is the great grandson of Henry Ford.
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And I think it was through it.
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Was in the 1980s, he went to work for Ford. I think this was right after college.
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But he had one problem, was his.
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Last name Ford, and he didn’t want to be perceived as some silver spoon kid. So what he did is he changed his name and he started working for the company and ground level positions.
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I think he started in product development, and then he went to finance for a bit. I’m sure there’s other numerous rules, but he wanted to build relationships with people on the assembly line, understand how this.
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Business functions, how leadership performs.
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Are they good?
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Are they bad?
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What kind of culture are we dealing with? And you wanted to do that from the ground up. And this is really inspirational because there’s a lot of entrepreneurs out there that want that instant gratification. There’s a lot of people who they leave college and they want to enter that director level or that high level position. And it’s just this pride thing where they expect it. And Bill Ford Jr. Was exactly the opposite. He’s like, Let’s learn the business. How does this business function from the ground up? I want to know how everything works, and I’m going to work my way up. And he did that for close to 20 years. So this was not like a three year thing.
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And then, hey, I’m going to jump.
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Into an executive position. He did it from the ground up. And what he learned is how to run this business more efficiently. And this was really important because before the recession in 2008, most of you know this already, but there was the bailout. The three big players in the US. You had GM, Chrysler, and Ford. And GM and Chrysler, they took the bailout from the US. Government. Ford did not. They had a strong enough balance sheet. They could survive on their own.
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And by that point, they had a.
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New CEO in place. But the foundation that Bill Ford put in place resonates today. We’ve had a few CEOs since, I think, like four CEOs, and we’ll get to the current CEO here in a second.
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But Bill Ford, with that, his term.
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There, CEO, was very impressive. And build a strong foundation on how you run a big business with a lot of overhead, a lot of supply.
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Chain costs, a lot of material costs.
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Really, a business that is expensive to run. So what Bill Ford did was really impressive.
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We all want that, if not instant gratification.
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We like to see results sooner than later.
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And that’s not always the case.
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And what he did, getting into the business, changing his name even, and running.
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This business as if he’s running from.
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The ground up and learning how everything.
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Works, is really a smart place to be. It can help you become a better CEO, a better leader and a better operator.
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Because you know how all the facets.
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Of the business run.
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Well, when he left, there are a few CEOs, and then I want to talk about the current CEO, which is Jim Farley. And he became CEO in 2020 and recently President and CEO as of 2022. Prior to that, he worked in multiple positions, including COO. He also worked at Lexus as VP and General Manager. And he began his career, it looks.
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Like, at Toyota and Lexus pretty much being the same business. But what’s really cool about that is.
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Toyota is known for their manufacturing processes. Really efficient and very rigorous. When you buy a Toyota, it’s a higher quality vehicle.
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They’re well built, they’ll last forever.
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I’ve heard of people taking Toyotas over a million miles.
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There are other vehicles, of course, around the globe that have done the same thing.
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I’ve heard about Volvo going there as well, but you don’t necessarily see that with GM. I’ve owned GM cars in the past, and they really go that long.
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I’ve heard some Suburbans in Tahoe Ken, but it’s quite rare.
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But Toyota solid vehicles and learning how that business operates and how they do things is really good for Ford. So I’m sure Jim brought some of that intel over to the company. So that’s really exciting to see. Now let’s take a step back. Looking at the 4Mss again, the margin of safety, not too exciting overpriced. But that doesn’t mean you should disregard the business.
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This is why it’s important to look.
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At all four Ms with the meaning.
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We know that checks out. We know EVs are going to be.
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Around, especially over the next 20, 30, 40 years probably.
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And we have another 18 years until.
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Electric should surpass gas.
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So that’s a good place to be, especially for Ford.
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They’ve got the Mustang and then they got the F 150 Lightning. Great spot to be with the motor. We know the cars that’s going to be super competitive around the globe, so be careful. If you’re a Tesla investor, there are other competitors creeping up, so that’s worth paying attention to. It’s that Ford F 150 with that wide moat right now. That’s really impressive. So that’s one reason to keep your eyes on forward and then you look at the management. I think that Jim Farley’s in a great position to continue to expand this business, and hopefully he can stick around. It looks like I was looking at their CEO history.
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Every three, four years, it looks like.
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Somebody else would step into a new position. I like to see him stick around longer. It’s nice to see terms that are like 5710 years or more. So I’d love to hear your thoughts on this stock. If you have any comments on board, if there’s any other auto manufacturers that you want me to take a look at.
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I can certainly do that. Just go ahead.
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Leave a comment below. We’ll see you in the next video. Bye.