Parker Ford wants to keep customers updated on how Ford is looking as an overall company, this is a great article on Ford Motor Company's overall outlook going into 2012 from seekingalpha.com: I wrote an article earlier this month entitled "Why I Choose To Collect My Dividends As Cash". In the article I explain my method of collecting dividend payouts, adding them to fresh capital coming in from my savings account and dropping this money into stocks I believe to be currently undervalued. Over the past few weeks, I've managed to build up enough of a sizable reserve from dividends and my paycheck to warrant a purchase in the upcoming few days. Rather than have this cash burn a hole in my brokerage account, I'd prefer to go value shopping.
After checking my current holdings to see if I'd like to add to my positions and also performing due diligence on a number of stocks on my watchlist, I believe I've made up my mind. I'm seriously looking into purchasing shares of Ford Motor Company (F) and here's why:
1. Ford's looking cheap. After the recent pullback on Friday, Ford is trading around $12.20 a share. Ford has a market cap of $46 billion, $132 billion in annual revenue and $20 billion cash on hand. Despite an incredible run up over the past few years, I feel the stock is still currently looking fairly attractive. Of course, it would behoove investors to keep an eye on the company's debt load, operating margin and growth projections. But even when considering these metrics, I believe Ford is looking undervalued.
2. Interest rates are staying low. The Fed has vowed to keep interest rates low for a few more years, meaning this will positively affect Ford's interest expense and assist in higher profits for the company.
3. Reinstatement of the dividend. Many investors were unhappy when Ford decided to cut its dividend in 2006, but unless you've been living under a rock, you're well aware Ford has decided to reinstate this payout, providing investors a 1.6% current yield. Though the company has a moderate amount of debt, it's reasonable to believe future dividend raises could be in store for shareholders.
4. Ford's beefed up its new lineup. This could be a controversial point, depending on if you're partial to General Motors (GM), Toyota (TM), Honda (HMC) or Nissan (NSANY.PK), but with cars as reasonable as $13,200 for the Ford Fiesta and a line of energy efficient electric and hybrid vehicles rolling out over the next 18 months, Ford's taking a serious approach to staying in this game. A quick glance at its 2012 and 2013 lineup suggests Ford is catering to a whole new class of car owners.
5. Ford is showing a commitment to energy effiency and sustainability. Along with improving fuel economy to meet consumer and regulatory demand, Ford is committed to reducing the weight of its vehicles and improving the aerodynamic properties of its cars. Finally, Ford has teamed up with partners like SunPower (SPWR), a solar electric panel manufacturer from California, to assist in powering a new line of electric cars with solar electricity. All in all, Ford has made impressive steps towards sustainability and this will likely help sell more cars down the line.
I've presented five reasons why I believe Ford, as a company, will thrive in the future. Despite a recent negative past in which many investors abandoned the company opting for safer havens, I feel positive about Ford's long term prospects and look forward to picking up shares this week. Don't give up on this American car manufacturer just yet.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in F over the next 72 hours.
About Parker Ford Lincoln, Inc. Parker Ford Lincoln Inc., is a multi-President Award-winning dealership in Murray, Kentucky offering new Ford and Lincoln Cars, Trucks, SUVs and Crossovers. Visit us online at http://www.parkerford.com.
