Jim Cramer Says There's 67% Upside And 'Minimal' Downside To The Detroit-Based Automaker

In the automotive world, Tesla Inc. (NASDAQ:TSLA) is a market darling. After surging 137% year to date, the electric vehicle (EV) maker has a market cap of over $800 billion — more than 13 times that of Ford Motor Co. (NYSE:F).

But according to CNBC’s Jim Cramer, you’d be missing out if you ignore the Detroit-based automaker.

Cramer recently visited Ford’s headquarters and was impressed by what he saw.

“From what I saw today with my own eyes and what I’ve heard from CEO Jim Farley, I think American ingenuity and innovation here at Ford are undervalued, undervalued versus Tesla and possibly even everything else made in America,” he said.

The Mad Money host believes that there’s “real value” in Ford.

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Managing Risk And Reward

Ford shares have climbed 28% in 2023 but are still down quite a bit from last year’s high.

Cramer sees a glorious revival on the horizon.

“If I’m right about Ford, this stock could get back to its high of $25, where it was in January 2022,” he said.

Considering that Ford shares currently trade at $14.95, the price target implies a potential upside of 67%.

When it comes to investing, the focus is not solely on chasing substantial gains but also on effectively managing the downside when things don’t go your way. And on that front, Cramer has good news.

“But if I’m wrong, I have to tell you, I think the downside — I’m calling it minimal,” he said.

And that means if he had to choose between Ford and the hottest automotive stock in the market, the answer is obvious.

“Investing is all about managing risk and reward. At these prices, I’ll take Ford over Tesla any day,” Cramer said. “And believe me, I like both.”

What’s Holding Ford Back

The Federal Reserve has raised its benchmark interest rates substantially to tame inflation. And that has consequences for the automotive industry.

In 2022 — a year that the Fed announced seven rate hikes — U.S. auto sales totaled 13.7 million vehicles, marking the lowest level since 2011.

“Remember, most cars and trucks are bought on credit, and the cost of financing keeps soaring,” Cramer said.

He then asked, “At what point does it get high enough to price out most buyers, especially the small- and medium-sized businesses that are the bedrock customer base for the F-150 and the wildly popular F-150 Lightning?”

Even though the cost of financing vehicles has gone up, Ford’s F-Series pickup remains an American favorite. In 2022, F-Series sales totaled 653,957 trucks, making it the best-selling truck in the country for 46 consecutive years and the best-selling vehicle for 41 years.

That number still marked a nearly 10% drop from the 726,004 F-Series trucks Ford sold in 2021.

Cramer’s Take On Housing

Since the Fed is committed to fighting inflation, many are wondering when rates can finally go back down.

Cramer suggests that “the biggest sticking point with the Fed” is the “ever-rising price of housing.”

The problem has to do with an imbalance between supply and demand.

“We have a true shortage of houses in this country — perhaps as many as 2 to 4 million,” he said.

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The U.S. Census Bureau reported that there were 1.63 million housing starts in May, up from 1.34 million in April.

Cramer says that if homebuilders can “keep that up, maybe we can finally put a dent in housing inflation.”

“If we get a combination of high unemployment and cheaper housing, maybe the Fed can stop tightening without having to obliterate the entire economy,” he added.

Jim Cramer Says There’s 67% Upside And ‘Minimal’ Downside To The Detroit-Based Automaker

Check out:

Managing Risk And Reward

What’s Holding Ford Back

Cramer’s Take On Housing

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