Tesla watch out: Ford & GM's stock prices are exploding

Tesla’s stock isn’t the only one in the auto space showing some electrified action to kick off 2021. Yahoo Finance's Brian Sozzi shares the details.

Video Transcript

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JULIE HYMAN: Automakers have been having a sneaky little rally this year. And for once, I'm not talking about Tesla or electric vehicle stocks. Brian, I was just looking at the returns this year for Ford, up 27% thus far in 2021, and GM, which is up 34%. What's going on?

BRIAN SOZZI: Yeah. Well, here's a little bit of #breakingnews, Julie and Myles. The top trading ticker on the Yahoo Finance platform is not Tesla, Neo, or XPeng. It is Ford right now. And it's interesting because there's really no news out today on Ford except the fact the stock is up here in the early goings.

Which ultimately got me to thinking, what is going on here? You know, Ford shares have made a strong move, up 23% year to date. As you mentioned, General Motors up 31% year to date. And I boiled it down to three reasons, essentially.

One, I think you're seeing a spillover of Tesla mania into some of these old-school auto manufacturers here. And the stock market and investors and Wall Street is finally starting to realize, Ford and General Motors, they ain't making horse and buggies anymore here. They are making electric cars to compete with the likes of Tesla over the next decade.

When you look at Ford-- you look at Ford here, their first electric F-150, that will come out in 2022. Our very own Pras Subramanian, he is just now testing the new Ford Mustang Mach-E all-electric SUV. It looks like an interesting truck. By all indications, that is seeing very, very strong demand. And the company also has the new Bronco coming out-- not electric, nonetheless a very exciting vehicle.

And then you look at GM. You know, they are well on the path to deliver 30 new electric-- electric vehicles by 2025. So I think that is starting to excite a lot of folks on the Street. Number two, you are also seeing, I think, a lot of analysts betting on big guidance from GM and Ford when they report earnings in a couple weeks. Both these companies have cut a whole lot of costs out of their business. They all, I would say, have some of the most exciting product lineups they have had in the past few years. That could push up estimates.

And then last but not least, strong truck pricing. You look at some of the recent analyst notes out there on Ford and General Motors, truck pricing is very strong. And that could only strengthen further if we get a new fiscal stimulus plan. You get out there. More job sites back out there happening. Certainly that will be helped by the vaccine fueling truck sales. And as you both know, guys, Ford and General Motors, they make the bulk of their profits still on big trucks.

MYLES UDLAND: Yeah. And, you know, Sozzi, I think that that news from Microsoft and crews the other day certainly still ricocheting through the markets. And I think also when you look at where all the heat has been in the market-- and we've talked so much about the retail energy, the speculative energy-- it's all been in the auto space.

And so I guess to me, it's almost like it's about time that Ford and GM start getting some more of that love. If everyone likes everything that's happening in auto development, from the LiDARs to the solid-state batteries, the other self-driving mechanisms-- I mean, this is even leaving out Tesla, which, of course, is an auto story, but also its own kind of story.

It makes sense that eventually we would see Ford and GM get in the mix. You have the pandemic tailwind. People like driving cars now. The kinds of cars, Sozzi, as you outlined, are exciting to investors. And also, guys, if I've heard one, I've heard all-- I've heard 500 pitches on why GM is such a great value stock. The stock went absolutely nowhere for a decade. Now it is finally busting out, and we see the performance here over the last couple of months.

Ford has doubled-- or excuse me, GM has more than doubled over the last six months. Ford is up 70%. So after a long time of looking at these businesses and investors wondering why the stocks didn't go up, well, here you go. Christmas has come in January, 2021.

BRIAN SOZZI: And just think about the optics here. You have an entire market looking for new opportunities. And to your point, Myles, you have GM shares trading about eight times forward earnings, Ford 9 and 1/2 times forward earnings, GM stock yielding about 4%, Ford looking-- yielding about 3%. Now the stories have started to improve. And if you're an investor with a lot of cash right now you put to work, why not take a gamble on these two stocks?

JULIE HYMAN: Or you could continue to gamble on Tesla, which trades at more than 1,000--

BRIAN SOZZI: Yeah, or that.

JULIE HYMAN: --times forward earnings.