USA! USA! USA!

Alright, we realize that Team USA soccer lost to the fighting waffles the other day in the World Cup, but Independence Day is tomorrow and we say let the patriotism keep flowing through the weekend.

We still contend that America’s greatest athletes do not play soccer, which is why we have not had better success on the international stage. This phenomenon may be changing gradually, but imagine Lebron James playing striker for the U.S. But we digress.

In keeping with the patriotic theme let us consider two American car companies. Let’s face it, when the slogan “Buy American” was invented this is the first thing people thought about.

General Motors (NYSE – GM – $37.74)was once an iconic American brand but has been on a steady decline since the early 80’s. Throw in the bailout and the perception has taken a further hit. What’s amazing is that sales and the stock have not been impacted yet given the massive recalls that the Company has issued. The stock is up nearly 19% over the past three months, with Y-o-Y sales for June 2014 versus June 2013 up 1%, after Edmunds.com's prediction that GM's sales would decline 8.5% for the period. The most recent recall was 7.6 million vehicles and the total for 2014 is close to 29 million globally. We think this recall mess catches up with both GM the Company and GM the stock and should be avoided now.

Mom, apple pie, and Ford pick-up trucks? In certain circles the Ford F-series truck brand is up there with the lexicon of all things Americana. Ford Motor Company (NYSE – F - $17.22) never participated in the government bailout in the late 2000’s when it was the in thing to do. Besides being in our price range, the growth forecast valuation indicates a buy with the simple P/E ratio dropping from 10 to 9 comparing the trailing 12-month to the forward 12-month metric. The Company is making a strong push in emerging markets like China and India as well. June Y-o-Y sales increased nearly 36% from 2013 to 2014 in India. At a quick glance, the technical analysis is very bullish from short to long term DMA. Couple in Ford’s strong brand presence in America and how that translates into consistent sales, and this stock is a long term winner with short term prospects as well. We think F can reach $18.50 by Q4 this year.

Have a great 4^th of July weekend!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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