Stock Picks: Ford, Marvel Technology, Qorvo
By Dmitriy Gurkovskiy, Chief Analyst at RoboMarkets
Below are the latest stock picks for July 10, 2018.
Ford Inc. is a US automotive company founded by Henry Ford back in 1903. Currently, it is in fourth place by the number of cars manufactured ever, after General Motors, Toyota, and Volkswagen.
Ford Inc. owns Troller, the Brazilian SUV brand, as well as 8% of Aston Martin (UK) shares and 49% of Jiangling Motors (China) shares. Additionally, Ford is involved in a number of joint companies, such as Changan Ford in China, Ford Lio Ho in Taiwan, Ford Otosan in Turkey, and Ford Sollers in Russia.
On June 7, the company announced its sales had fallen significantly in China. Compared to last year, the demand decreased by 38%, reaching just 62,057 cars. General Motors, on the other hand, managed to boost their sales in China by 4.4% over the same period.
China is overcrowded with car manufacturers, both small ones and large, with the competition being fierce. At this rate, the winner is the one that can update the model range on time and meet the average Chinese customer needs.
In 2015, Ford started selling Kuga (Chinese version of Ford Escape), and consumers got quite interested in it, with as many as 67,767 cars sold within 6 months. The company assumed the demand would stay the same, and just re-styled the exterior design a bit, but eventually, this was not enough. As such, in the first half of 2018, only 25,155 Kugas were sold, as the average consumer already considered it outdated and found some more innovative solutions in other companies.
Ford management say they were ready for this failure and launched new Mustang and Ranger Wildtrak sales in order to keep the demand high. Besides, they are going to present new Ford Focus and Ford Escort later this year, which could also boost the sales. By 2025, Ford want to launch 50 renewed or whole-new models.
This could well help to recover the sales indeed, but for the force majeure obstacles created by Donald Trump. The US President initiated a trade war against China, which lead to increased customs duty for both cars and farm machinery. In this situation, the only hope for investors is Changan Ford, a joint company that could boost the sales again and make them reach the previous results. Further on, automotive companies will have to take some measures regarding in-depth local marketing strategy in China, in order not to lose this market totally.
China has already increased car customs duties, but this is not the only bad news for the US automotive companies. If the trade war continues, the EU may blow another strike against them, by imposing the same duties.
An old joke says a businessman can start a successful company and many jobs even in the middle of a desert, but if the government comes in, the results will be totally unpredictable. This is what is actually happening now, with the government actively trying to ‘help’ businesses.
The current situation does not allow any conclusions, and whenever an investor is in doubt, the best option for them is cash.
Technically, Ford is experiencing a downtrend, with the price being below the 200-day SMA. The trendline that was supporting the price since February is already broken out, which is a negative signal.
The most recent resistance is at $11.60, and in case the price bounces off it, it may well go further down. The downtrend is now prevailing, but at the same time the Short Float is quite low, at 3.18%, which means few traders want to be bullish right now.
Marvel Technology Group (NASDAQ:MRVL)
Marvel Technology Group was founded in 1995 and is based in Santa Clara, CA. The company focuses on data storage devices, high performance processes, broadband and wireless transceivers, memory controllers, and LED processors. The company was also responsible for supplying Wi-Fi chips for Apple iPhone 1. Currently, Marvel produces over 1 billion chips per year.
Last week, Marvel finalized its merger with Cavium Inc., a semiconductor device and system-on-chip producer. This merger will lead to the birth of a leading semiconductor manufacturer offering unique data storage and processing devices, wireless devices, and security products to its customers.
The board is expecting a rise in demand from automotive manufacturers that are in need of high processing speed and low energy consumption.
After the Cavium acquisition, Marvel got three new directors on the board: Syed Ali, Brad Buss, and Dr. Edward Frank.
Syed Ali was the Co-founder, President, Chief Executive Officer, and the Board Chairman in Cavium Inc. since its inception.
Brad Buss was a Director at Cavium since 2016, serving as a Financial Director at Cypress Semiconductor and Solar City before. Currently, he is also a member of Tesla Motors and Advance Auto Parts Boards.
Dr. Edward Frank also has been a Director at Cavium since July 2016, being also the co-founded of Cloud Parity, a startup company. Before that, he was the Vice President at Macintosh Hardware Systems Engineering, Apple. He also served as an R&D Vice President at Broadcom Corporation.
Technically, flat correction is coming to an end on W1, which could mean that uptrend will be continuing.
On D1, the price attempted to break out the 200-day SMA top down, but was unable to. This attempt occurred on June 25, after which the volumes went up and the price recovered, which can be easily explained by the investors trying to buy at a better price. There’s also an obvious support at $20.00, which was tested three times and was never broken out.
Short Float is the only thing that may make the investors wary, as it is quite high and is at 11.72%. There’s another thing, though: the insider sales in June amounted to $219,980.
Qorvo Inc. is a relatively young company that appeared in 2015 after Tri Quint Semiconductor and RF Micro Device merger. It is headquartered in Greensborough, NC. This is a semiconductor manufacturer that creates and sells radio systems and app solutions enabling wireless and broadband communication. In June 2015, Qorvo became a part of the S&P 500 Index with a value of $12 billion. Currently, over 8,000 people are employed with Qorvo.
Last week, the investors got interested in this company as its shares went up sharply, appearing among the S&P 500 leaders. On July 5, Qorvo shares went up as much as by 5.60%.
Still, there is nothing special about the company, with this growth being totally based on good financial reports and the ever-high demand on Apple phones in China. Qorvo is a major supplier of iPhone parts, so this is what really makes difference for it.
The Board set a goal to increase its market share across Chinese smartphones and boost the EPS to $6.40 by 2019.
On D1, there is an uptrend, where the 200-day SMA acts as a support. The most recent resistance is at $85.00, and once it’s broken out, the price may reach $90.00.
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.