-
you're reading...
Investing

Ford Motor Co (NYSE: F)

As promised – albeit a little later than promised – I am posting my reasoning of why Ford is a company worth investing in – assuming you have decided to take the plunge into the stock market world.  Before I dwell into anything, let me say that what I am writing in this post is entirely and only my own personal opinion.  I have no formal training in anything that deals with the stock market and my decisions are based mostly on my own common sense (which may not be your common sense).  If you invest, than you do so at your own risk and I am not liable for any losses which you may incur if you chose to invest into this stock as this is your money – not mine.  I seek safe harbor.

Now that I have the formality done and over with, if you have read any of my investment related posts, you will see that I recommend investing for the longer term i.e. buy and hold for 1-3 years.  I mostly concern myself with the fundamentals rather than the so called technical charts since I don’t believe one can predict the behavior of stock based on some chart formation from the past, however I glance at the chart to see what was cooking in the past.

One of Ford Motor Co’s fundamentals is that Ford Motor Co has not taken advantage of the bailout provided by the US government.  In fact, out of all the American auto companies, Ford was the only one who did not incur billions of debt payable to the US government in order to stay afloat; this, despite incurring a loss of over $14B – i.e. even after this much loss, they had enough liquidity to successfully restructure without going into bankruptcy like GM did

So ok, everyone was screaming these news over 2 years ago so why on earth am I mentioning this now?  That’s because hindsight is golden!  Within the past 2 years, Ford Motor Co has gone from a price of $4USD / share to a price of $15USD / share, overall adding value – take a look at this chart:

The Darling

Furthermore, out of 17 analysts following the stock, the majority is split between a buy and a strong buy – with the worst case scenario in a hold pattern.  The S&P Rating of the stock is also 4 stars:

But wait?  where did Ford Motor Co, get the cash to not need the billions of $ from the US?  Well, truth is that they did take advantage of some low interest loans and they managed to get a lot of cash by mortgaging every facility they had in order to borrow $23.5B in 2006 in order to have operating cash when the shit hit the fan in 2008.  Pure staggering genius:  you are using your own infrastructure to finance your operations.  In case you don’t believe me:  Ford Motor Co hopes to be investment grade stock by 2011 / 2012 is the article – I’d say they have managed to succeed, wouldn’t you say so based on the appreciation of the stock price and analyst recommendations?  Also, from the article, you see that they wanted to be an investment grade stock in 2011 / 2012 (i.e. now) – according to the chart, they have done well and have achieved or are achieving what they said they will.

And finally, Ford Motor Co is a global company.  You have Ford cars driving all over Europe – you don’t have GM cars though do you?  Also, Ford is a diversified car company; GM on the other hand is famous for its pick-ups mostly.

Based on the above, I would invest in Ford and hold as I believe it will at least double in value within the 1-3 years with the potential of tripling to $40-$45USD / share within that time period.

And, as a bonus, for those of you interested, I’m including 2 PDF files concerning Ford for your viewing pleasure (click to open / download):

Cheers,

M.

Advertisements

About Michael W.

Project Manager for a large financial services company. Non-denominational closet investor. Entrepreneur running a small shop with a big idea

Discussion

2 thoughts on “Ford Motor Co (NYSE: F)

  1. While I hold Ford stock and share your optimism regarding the company, I have to correct you on your assessment of General Motors. GM is very much present in Europe through its Opel and Vauxhall brands and also owning Holden in Australia. GM is also not reliant on light truck sales as you imply. Both companies rely on this sector in North America equally. In fact, Ford has outsold GM in light truck sales in 2010, yet GM has a larger overall market share than Ford.

    Posted by Paul | May 23, 2011, 22:14
    • I stand corrected – however, due to Opel’s ongoing restructuring – multiple attempts to split it between FIAT / Magna / minority GM ownership etc, I wouldn’t really count GM’s presence in Europe as anything that can substantially impact Ford’s stock in the future (I believe Opel and Vauxhall are now merged into a single entity?). I am not too familiar with the Australian market on the other hand…

      In addition, it was mostly due to Ford’s decent sales in Europe in 2008 that this automaker also ended up being in a better position than its GM counterpart

      Posted by moneycrumbs | May 24, 2011, 02:00

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: