By Shawn Langlois

SAN FRANCISCO (Dow Jones) -- UBS told clients on Friday that it's time to unload shares of General Motors Corp. and put their money in Ford Motor Co., the only one of the major U.S. automakers yet to accept handouts from the federal government.

The mixed take on the two companies didn't stop investors from buying, as Ford (F) added almost 8% and GM (GM) gained 5.6% in early trading.

"The U.S. auto industry is going through one of the most severe contractions in history," analyst Colin Langan said. "In this environment, companies are focused on preserving liquidity."

Ford, he pointed out, has enough cash to weather the current slump, though a bankruptcy filing from GM or Chrysler would pose a risk since they rely on many of the same suppliers.

Langan said GM's restructuring, which will likely include bondholders swapping debt for equity, will be highly dilutive to shareholders.

"Even if it receives more bailout funding, we forecast that GM will approach its minimum operating cash," he added.

With GM struggling to stay out of bankruptcy court and retool its business, Langan said he believes Ford has an opportunity to take advantage of the distressed competition.

The industry received a boost Thursday when the U.S. government signaled its willingness to continue its support by offering up to $5 billion in financial aid to parts suppliers. The announcement triggered a broad industry rally that spilled over into Friday.

UBS also gave BorgWarner Inc. (BWA) a neutral rating and Johnson Controls Inc. (JCI), which Langan said has "sufficient liquidity and should benefit from the U.S. stimulus package," a buy.

The government is slated to render a decision by the end of the month as to whether to keep up to $39 billion flowing to GM and Chrysler, but an announcement from President Barack Obama's auto task force could come as early as next week, according to published reports.