Why You Should Buy Ford (NYSE: F) Stock
Shares of Ford (NYSE: F) recently had their one-year anniversary of the current rally's starting point. This is the first consistent march north in years and marks a new departure for the automobile stalwart,
Shares of Ford (NYSE: F) recently had their one-year anniversary of the current rally’s starting point. This is the first consistent march north in years and marks a new departure for the automobile stalwart, whose shares for so long looked consigned to the dust heap of history.
Alongside Ford, there are few companies still trading today who have the unenviable boast of having hit their all-time highs way back in 2000. But that’s only relevant for those focused on what’s going on in the rearview mirror. Investors on this side of 2010 and more recently have shown themselves to be very much forward-thinking, with a company’s potential for future earnings far outweighing any historical baggage that might otherwise hold shares back.
With that in mind, we can see that since the initial shock of the COVID-19 pandemic starting wearing off this time last year, shares of Ford have tacked on an impressive 180%. This puts them well above their pre-pandemic levels and shares have recently been trading at prices not seen since Obama was still in office. And even with this recent run, there are plenty of reasons for investors on the sidelines to consider getting involved.
It took a while, but it seems like the company has finally gotten on the right track when it comes to electric vehicles (EV). We need only check out the price chart of Tesla (NASDAQ: TSLA) shares to get an understanding of how lucrative that market might be, and Ford are just one of many traditional carmakers trying to muscle in and get some market share for themselves.
To that end, the company’s recent sales numbers have been impressive, driven in a large part by their electric vehicle range, which saw an increase of 74% year on year. Their VP of Sales in North America, Andrew Frick, summed it up the performance well earlier this month when he said “Ford’s retail sales exceeded 2020 and 2019 sales levels. Our customers are really embracing our new electrified vehicle lineup.”
In addition to the EV line, China has also become a jewel in Ford’s market, with total sales there up more than 70% on the year and the company on track for five consecutive quarters of growth in the region. Consumer demand in China for cars, both electric and non-electric, is rebounding savagely from the pandemic-related dip, and Ford’s “Best of Ford, Best of China” strategy seems to be paying dividends.
Wells Fargo was out recently with an Overweight rating to Ford shares, saying they were impressed with how much management has been able to accelerate what was previously considered a very slow turnaround. In a note to clients, analyst Colin Langan said "the turnaround is a massive change. Ford is no longer focused on having a product for all markets, but rather focused on delivering products in segments with competitive strength - pickups & SUVs. Ford North America has one of the strongest line-ups in decades and CEO Farley also seems to be accelerating Ford's shift to EVs.”
Their bullish call was matched yesterday by Deutsche Bank, as they added Ford to their short-term Catalyst Call Buy List. Analyst Emmanuel Rosner is a fan of favorable vehicle mix/pricing for Ford and a robust product cycle. He’s also expecting the company’s ongoing restructuring savings to lead the automaker to a decent Q1 earnings beat.
There’s strength to be seen from a technical perspective too. A 15% slide in the past month was for the most part completely reversed this week as buyers were quick to step in as shares fell towards $11. Those getting involved should look for some consolidation at current levels before the next leg begins. While they were a thorn in many investor’s portfolios for much of the past two decades, it’s fair to say that the Titan of Michigan has successfully turned things around and is in many ways a new company.
They have momentum on their side as well as several fundamental and technical factors, and with close to a green field opportunity in front of them in the form of the EV market, you’d want to be very bearish on the space to not want to back Ford’s chances.
Ford Motor is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.