Betting on Ford and GM is a cheap wager now

— -- A: The depressed share prices of U.S. carmakers are even more irresistible to some than that new-car smell.

There is a strong case to be made for Ford. The company ended the September quarter with cash and cash equivalents of $27.5 billion. Furthermore, the company generated cash from operations of $1.1 billion in the quarter. Subtracting the company's capital expenditures of $1.7 billion, which could likely be trimmed, that shows a quarterly cash burn of $600 million.

At that rate, which hopefully is not going to continue, Ford has enough cash to last nearly 46 quarters. It's important to note, however, that this does not include any non-operational costs, such as pension expenses. And it's possible the cash burn could worsen before it improves.

Over at GM, things don't look as good. During the September quarter, GM burned through $7.5 billion from operations. That gives you a quarterly cash burn during the quarter, when you include $1.4 billion in capital expenditures, of $8.9 billion. At that rate, the company's $15.9 billion in cash and cash equivalents as of the end of the third quarter isn't going to last even two quarters.

You can see why GM is in need of federal government bailout money.

That's just the financial picture. When you speculate on a turnaround, the product lineup is key.

Here, too, Ford appears to have the edge. Ford is moving aggressively to tackle the small-car market, with cars like the Fusion Hybrid. And Ford continues to get high marks for reliability. "Ford has made great strides in reliability, with some models now rivaling the best from the Japanese automakers," according to the "Report card for Detroit" study in the February 2009 issue of Consumer Reports.