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Today we're excited to share with you the latest pick from our champion stock picker, Bill Patalon. Bill has an amazing track record – one that most Wall Street investors can only dream of. Today's pick is one Bill loves so much, he's named it his top buy for 2017. And he'll be back soon with the third installment of this Stock Talks series, where he'll give you another top stock pick for 2017. Now, here's Bill…
I'm the Executive Editor here at Money Morning, and I'm here to tell you a story.
Years ago – when my father was a little boy – my grandfather, William Sr., was a machinist for the Lehigh Valley Railroad in Duryea, Pa.
He worked out of a railroad yard known as Coxton Yards, which is right next to the Lackawanna River.
The Lackawanna, like a lot of rivers, is a really interesting feature. It's great during the summer months when it's flowing, but during hurricane season, or stormy weather, or during the winter runoff… it can be a nasty beast.
And this year, it overflowed. I mean, it overflowed everywhere. It wiped out the low-lying areas. It washed out bridges. It washed out roads.
And my grandfather found himself trapped on the wrong side of the river from his family.
So, you know, being the kind of creative guy that he was -a machinist, that's what he did – he made do with whatever was around him.
He was very much a product of the Great Depression. You know, very enterprising, very innovative, made do with whatever was around him.
He wanted to get home to see his family, and he realized there was only one way to do it…
He had a Model A Ford Coupe, a 1929 car that he had bought brand-new and he was very proud of and he'd driven it for years. So he let the air out of the tires, put it up on the high railroad trestle that crossed the Lackawanna, drove it across, and got home to his family.
Well, that car is still in our family today. My father drove it through high school. I drove it through high school. And I'm fully expectant that my son, Joey, when he gets to be of driving age, he's going to drive it through high school, too.
As a matter of fact, I find him down there in the garage sitting in it often and pretending he's driving already. So I know he's raring to go when that car gets on the road and he's got his license.
The Patalon family is very much a Ford family. So I know this company better than anyone. And I'm here to tell you this is one of the most interesting stocks on my radar right now.
Ford Motor Co. (NYSE: F) – a company we all know for pioneering mass production, for building the Model T, for Henry Ford selling out cars saying, "You can have any color you want, as long as it's black" – is no longer a car company.
It's a technology company.
It's a materials company.
It's a performance company.
It's a racing company.
And here's the interesting thing – this is the most interesting facet of all – they have just put a furniture guy in charge of their biggest, newest, and most important business.
Ford Is No Longer a Car Company
So before I tell you about this big new business that Ford had launched, let me back up for a second to my statement that Ford is no longer a car company, because I know that's got to shock a lot of you.
The fact is that CEO Mark Fields now says that Ford is a transportation company.
The car market that you and I have known for so many years – that our parents knew, and their parents knew – doesn't exist anymore. It is totally changing.
So I've been covering public companies for a long, long time. I did it, you know, during my years as a journalist. I've done it as an analyst and here as a guru and a newsletter editor. And one thing that I've seen over and over again is that CEOs are very reluctant to attack a problem that they see coming at them in the future: a change in their market, you know, a challenge from a new technology – and that is not the case with Mark Fields.
He sees that this market is changing. But instead of ignoring it, or pretending it's going to go away – which it won't – he's tackling it head-on.
But that brings me to the story that I really wanted to tell. This new business that Ford has formed – a business they put a furniture guy in charge of.
Ford Smart Mobility
Back in March, Ford formed Ford Smart Mobility, LLC. This is a company that they are going to use to foster ride-sharing, driver-less cars, connected cars – all the futuristic stuff that is going to change the car market.
But it wasn't just the fact that they formed this business that really grabbed my attention. It was the guy that they chose to head it…
This guy's name is Jim Hackett.
Years ago, he was the CEO of Steelcase. When he took control of the company they made office desks. You know, workplace stuff. But he changed it from just a metal desk company into an office space company. And not only did he transform the company, but he transformed his entire industry.
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But Hackett didn't just distinguish himself with Steelcase.
It's what he did with the University of Michigan that I found really fascinating.
Think about the University of Michigan – the Wolverines. Story football program. You know, major powerhouse. Ball games every year. You know, legendary coaches. You know, a come-from-behind win. The real fabric of sports. The really cool stuff that we tune in every Saturday to watch, every Sunday to watch.
Michigan, the Wolverines, had gone from being a football powerhouse to a football laughingstock. I mean, you know, attendance was falling. They were making all of these incredible marketing gaffes. There were some problems on the field. There were allegations that the coach had kind of lost the team. And instead of getting better, it was getting worse.
The school realized they had to do something, so they did the one thing they could do – they fired the athletic director. The guy they hired was Jim Hackett.
They brought him in as the interim AD. They kind of gave him carte blanche to make some changes and they just turned him loose.
And Jim Hackett, as the interim AD for the Wolverines, pulled off one of the coaching coups of the decade.
When nobody was looking… when they were all watching all of the scuttle-butt in the sports columns about who Michigan was going to hire and we're going to handicap the odds that this coach is going to get the job or that coach is going to get the job…
Out of nowhere, he was able to bring in Jim Harbaugh. The former quarterback, the former San Francisco 49ers coach, a guy who turned that team from a laughingstock into a perennial playoff team, into a Super Bowl team. And who had had a falling out with the owners of the team.
Now see, Harbaugh, Michigan was his alma mater. He'd been, you know, the big man on campus, the football star there, before going off to play quarterback and then coach in the NFL.
And here was a chance for Harbaugh to come back and transform the school that had made him back into a powerhouse. Hackett convinced him to do this.
Nobody expected it.
When the signing was announced, it hit like a bomb. People were absolutely stunned.
Hackett had done this by working behind the scenes, working quietly. No leaks, no word in the press. And after he brought him in there, he kind of just stepped aside. There were no confrontations of egos, no butting heads. He just stepped aside and turned Harbaugh loose.
In two years, Harbaugh turned Michigan from a laughingstock back into a football powerhouse. And now he's actually being rumored to make a triumphant return to the NFL.
But Hackett never felt the need to take credit for this. He never felt the need to grab the limelight himself. He was content with identifying the problem, fixing the problem, and letting somebody else take the credit.
This is the guy that Mark Fields, the CEO of Ford, has put in charge of their newest and most important business: Ford Smart Mobility.
The Future of Ford
Here's the thing: We're always going to need vehicles. We're always going to need cars. We're always going to need trucks, and busses, and taxi cabs, and all of that other stuff.
But the form of those vehicles, the ownership structure of those vehicles, may change.
Ford is trying to bring all of these new technologies together under one roof, with one focus, with one objective, with one strategy.
Things like Ford Speed Pass, which is this kind of data-marshaling service. You think about MapQuest and the GPS navigation… this takes it even a step further. You're going to go on a trip, you're going to drive somewhere, and you're going to know exactly where you're going. You're even going to know where you park.
I'm talking about the specific space you're going to park. No more driving around in the rain, cursing trying to find a place to put your car or truck. You're going to know what space is open, where you are going to put your car, and you're going to drive right into it and get right to your destination.
They are even buying new technologies like Chariot, which is this crowd-sourced bussing service that they just picked up here recently.
How to Invest in Ford
So let's talk strategy. How do you buy this stock?
I think you go into this with an accumulate mindset. Buy a block of the stock now. You're in the stock, making money. If it pulls back, throw a few more bucks in it. Add to it. Look to hold it for the long term.
In fact, every year at this time I put together a shopping list of stocks for the new year, and Ford is at the top of my list.
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