United Microelectronics Corporation and Ford Motor Company update

Posted on April 24, 2006 , filed under Stocks | Print This Post

UMC, United Microelectronics Corporation closed today at $3.77 and reached a high of $3.80, matching my prediction that the stock would hit $3.80-$3.90 this week. UMC closed at its highest price since August 15th, 2005. UMC has also met my price target of $3.60 set on November 11th, 2005. I purchased 15,000 shares of UMC at an average price of $3.17.





Total number of picks since September 22nd, 2005: 23, Completed picks: 15, Winners: 13, Losers: 2 

Total Winners: 86.6%

F, Ford Motor Company dropped 4.92% to close at $6.96. F traded as low as $6.91 matching my prediction that the stock would hit $6.90-$7 this week. I believe we may see further drops if the price of crude oil doesn’t ease up. If F trades under $6.50 this week, I will add shares to my position. Long-term I believe the price of crude oil and gasoline will drop, due to a shift toward alternative energy sources such as corn ethanol fuel and hybrid vehicle technologies. Ford pays a high dividend of 5.5% and I am enthusiastic about the possibility of a turnaround for the company. F is definitely a speculative purchase at the moment, so I would not recommend purchasing the stock for risk adverse investors.

Here is a quote from an AP article about Ford’s turnaround and current dividend:

Morgan Stanley’s Jonathan Steinmetz maintained his “Equal-weight” rating for Ford, but lowered 2006 through 2008 earnings estimates.

“The only things keeping us from an “Underweight” rating are the company’s liquidity to undertake a turnaround, a high dividend yield (with the dividend unlikely to be cut anytime soon), and the lack of an immediate negative catalyst,” Steinmetz wrote.

I believe rising crude oil and gasoline prices will keep F depressed, but open the door for a long-term investment opportunity.

Can someone also tell me why F isn’t an attractive takeover or joint venture candidate for a Chinese or Japanese automaker? Ford’s brand name with a Chinese automaker’s low cost manufacturing capabilities or a Japanese automaker’s process, quality assurance and manufacturing efficiencies should be a stellar combination. Other than legacy liabilities and possible government intervention to prevent a growing Chinese trade gap or Japanese monopoly in the U.S. auto industry, would a deal be possible for Ford?

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