Our Micro-Bubble Winners report in August 2018 predicted this stock would benefit from the bubble bursting in Tesla’s overvalued shares. And, over the past year, it is up 69% while TSLA is down 7%. The S&P 500 is up 15% over the same time.

Our overarching thesis on the auto industry remains intact: the death of legacy automakers is greatly exaggerated.

As an industry leader with the proven ability to generate profits in good and bad times, this stock remains undervalued and continues to provide strong upside potential.

Below, we provide an excerpt from our latest Long Idea report. Get the full report a la carte here.

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This stock presents quality Risk/Reward based on the company’s:

  • leading market share in key markets,
  • ICE, hybrid, and electric vehicle manufacturing capabilities,
  • superior profitability compared to peers,
  • strong dividends and buybacks supported by free cash flow, and
  • undervalued stock price.

More Profits Than Meets the Eye

This company’s Core Earnings, our proven superior measure of earnings, grew 3% compounded annually from 2010 through the TTM.

Investors only analyzing GAAP net income may not realize just how profitable the company is. The company’s Core Earnings are higher than GAAP net income in each of the four last fiscal years as well as the TTM.

Over the TTM, the company’s Core Earnings are $10.6 billion while GAAP net income is much lower at $1.9 billion.

Figure 4: Core Earnings and GAAP Net Income: 2021 – TTM ended 2Q26

Sources: New Constructs, LLC and company filings

Real, not Fake, Cash Flow Generation

This company has generated large cash flows for over a decade now, and recent results look just as strong as years past.

The company generated a cumulative $46.3 billion (55% of enterprise value) in free cash flow (FCF) from 2016 through 2Q26. See Figure 7 from the full report. Over the TTM, the company generated $10.8 billion in FCF.

Importantly, the company generates more than enough FCF to pay dividends and repurchase shares.

Since 2022, the company has spent $32.6 billion on dividends and repurchases. Over the same time, the company generated $35.6 billion in FCF.

Figure 7: Cumulative Free Cash Flow Since 2016

Sources: New Constructs, LLC and company filings

…there’s much more in the full report. You can buy the report a la carte here.

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