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Don’t Count Out Ford’s Move into Electric Vehicles
Stock Analysis & Ideas

Don’t Count Out Ford’s Move into Electric Vehicles

Ford (F) is a classic American automobile manufacturer. I am bullish on the stock.

For generations, people have viewed Ford as a safe company to invest in. As a result, F stock tends to be viewed as a “steady Eddie” type of stock.

Don’t get the wrong idea, though. Ford is still an aggressive automobile manufacturer with cutting-edge technology.

Sure, there are plenty of start-ups seeking to dominate the electric vehicle (EV) space.

Yet, don’t count Ford out. This old automaker still has a strong presence in the traditional (internal combustion engine) vehicle market while also expressing strong ambitions in the fast-expanding EV niche. (See Analysts’ Top Stocks on TipRanks)

A Quick Look at F Stock

It’s truly amazing to consider that, for a brief moment in 2020, F stock shares could be purchased for $4 apiece.

Of course, the share price is much higher than that today. Ford stock is currently near the $20 level.

Imagine that: a 5x move in less than two years. It just goes to show that when you invest in great companies when everybody is freaking out, the returns can be life-changing.

Even after that large rally, however, F stock isn’t really expensive.

On a trailing 12-month basis, Ford has a price-to-earnings ratio of 27.7, which is not particularly high.

Furthermore, income-focused investors should like F stock because the company offers a forward annual dividend yield of about 2%.

Truly a Global Vehicle

On Nov. 23, Ford CEO Jim Farley posted an important announcement on social media.

“In less than 12 hours, we’ll reveal the new @Ford Ranger. Sold in more than 180 countries around the world, it’s truly a global vehicle,” the CEO wrote.

Farley is referring to the 2022 Ford Ranger midsize pickup truck. This launch serves as a reminder that traditional vehicles are still a crucial part of the automotive market.

Through October, The new Ranger model is likely to strongly impact Ford’s bottom line.

The company sold around 80,000 Rangers in 2021 by October. That’s 4% less than the comparable period of 2020. Hopefully, the new Ranger’s release will boost Ford’s year-end sales.

Ford made a savvy move by including enticing features in the new Ranger model.

These features include LED lights, a tailgate workbench, power outlets in the pickup bed, and an improved powertrain.

A Big Announcement from the CEO

Apparently, Farley likes to make important announcements on social media.

Not long ago, Ford’s CEO wrote, “It’s a big moment for the auto industry. Early EVs were good for the environment, but lacked emotion. Like appliances. That’s changing.”

There’s no denying the truth of what Farley’s saying here. However, the CEO’s follow-up may have surprised some people.

“We are now expecting to produce 600,000 EVs/yr globally by end of 2023. 2x our original plan,” Farley proclaimed.

On top of all that, Farley declared, “We aim to become the 2nd biggest EV producer within the next couple years.”

These announcements should dispel any notions that Ford is an old-fashioned automaker.

By doubling its EV production capacity plans, Ford is effectively threatening to leave some of the recent EV start-ups in the dust.

Becoming number-two in a highly competitive EV market is an ambitious goal. If any automaker can achieve this, though, it would be Ford.

Wall Street’s Take

Turning to Wall Street, Ford earns a Moderate Buy consensus rating based on nine Buys, two Holds, and two Sell ratings assigned in the past three months.

The average Ford price target is $18.38, implying 5.4% downside potential.

The Takeaway

If you’re invested in F stock, you have an asset that represents generations of steady, consistent returns.

At the same time, Ford is a modern company with strong ambitions in traditional and electric automobiles.

So, consider F stock as the company is aggressively maintaining its position – and even moving ahead – in the competitive automotive market.

Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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