Ford Continues to Thrive

I want to say a few words about Ford Motor ($F). I was very optimistic for this stock at the beginning of the year. However, a number of problems have hindered the company and the stock has plunged.

As a result, Ford has been near the top of my list for stocks to ditch for next year’s Buy List. But Ford is now so cheap that it’s a good bargain. The selling has been very overdone.

Also, there’s been some good news at Ford recently. Moody’s said that it’s considering raising the company’s credit rating which is currently in the toilet. The catalyst is the recent deal agreed to by Ford and the UAW. Obviously labor costs are a major issue for the company to remain competitive. (Ford and the union aren’t quite there since one of the locals just rejected the deal.)

Ford borrowed a ton of money before the financial crises. The company has worked to pay off their debt but there’s still a long way to go. An improved credit rating will help alleviate some of their interest costs.

The company also had a strong sales month for September. It was their best September since 2004. The company’s car sales aren’t strong but the trucks and utility models are doing very well.

The Dearborn, Mich.-based auto maker said its total U.S. sales increased 8.9% last month to 175,199 units. Ford-brand sales leaped 14.4% to 168,181, while its struggling Lincoln unit suffered a 6.6% decline to 7,018 vehicles.

Ford’s growth was highlighted by a 41% jump in Escape sales and a 204% surge in Explorer sales.

The company also sold 15% more trucks, including its best month of F-Series sales of the year at 54,410 units sold.

SUV sales climbed 35%, posting their best month at Ford since 2004. Ford’s hot-selling Escape vehicle has set internal monthly sales records seven out of nine months and is up 32% to 187,850 year-to-date.

“Ford continues to deliver strong sales results in a dynamic marketplace with a broad portfolio of fuel-efficient, high-quality products,” Ken Czubay, vice president for U.S. marketing sales and service, said in a statement. “This is further proof that Ford is offering the vehicles – with the fuel economy and technologies – that people truly want and value.”

Last week, the stock dropped to $9.05 which is 4.7 times this year’s earnings. Ford has been as high as $11.77 today.

Posted by on October 12th, 2011 at 11:55 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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