Ford doubles down on EVs, while Wall Street looks to Disney for answers. Here’s our take on these Club stocks

By Eduardo Saverin On Apr 12, 2023

Walt Disney (DIS) is facing skepticism from Wall Street over its streaming strategy and softer growth at its parks, while Ford Motor (F) is expanding its electric vehicle production. Here’s the latest news on these two Club holdings — and our take, too. Walt Disney The news: Guggenheim on Tuesday lowered is price target on Disney to $130 a share, from $140, citing moderating growth at the entertainment giant’s parks and resorts. But the firm maintained a buy rating on Disney stock. The analysts also flagged investor questions over the company’s streaming strategy. Chief among those are whether Disney will move to acquire Comcast ‘s (CMCSA) minority stake in Hulu and its plans for ESPN. Disney currently owns a 66% stake in Hulu, while its other streaming platforms include Disney+ and ESPN+. Guggenheim analysts expect uncertainty over the future of Hulu and ESPN to “limit near-term share appreciation toward an asset and operating value…above the current share price.” Comcast in the parent company of NBCUniversal and CNBC. DIS 1Y mountain Walt Disney (DIS) one-year performance. The Club’s take: We continue to think that Disney CEO Bob Iger has the right vision for resetting the company on a path to profitability in its streaming operations, while optimizing costs throughout the organization to improve margins. We also agree with Guggenheim’s take that once management provides more clarity around its plans for Hulu and ESPN, investors will be able to better value the company’s operations and be less concerned with execution risk. Ford Motor The news: Club holding Ford on Tuesday announced a $1.3 billion investment in its Oakville assembly plant in Ontario, Canada. The automaker plans to transform the facility into an electric vehicle (EV) hub, bringing next-generation EVs to market by around 2025. “The plant will be the company’s first high-volume transformation of an existing plant in North America to make EVs,” the company said. The factory upgrade is part of Ford’s strategy to develop production capacity for 2 million EVs globally by the end of 2026. F 1Y mountain Ford (F) one-year performance. The Club’s take: Scale is so important for any automaker, especially one that wants to flip from losing money to profitability in a timely fashion. In Ford’s expected earnings before interest and taxes (EBIT) margin walk to 8% by year-end 2026 from minus 40% in 2022, the company expects to get a 20% benefit from scale alone. Ford management expects to achieve that goal by ramping up to 2 million units of production capacity by the end of 2026, while optimizing its manufacturing footprint. It will take time to see the positive benefits from the billions of dollars invested today, but forming a sustainably profitable EV business is what we want to see as shareholders. (Jim Cramer’s Charitable Trust is long DIS, F. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

A worker installs the instrument cluster for the Ford Motor Co. battery powered F-150 Lightning trucks under production at their Rouge Electric Vehicle Center in Dearborn, Michigan on September 20, 2022.

Jeff Kowalsky | AFP | Getty Images

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