Watch out Tesla (TSLA), because carmaker Ford (F) may be one of your biggest competitors in 2022. The company recently announced a set of changes around its Lightning F-150 electric truck that have potential buyers very excited. Ford’s growing dominance in the electric vehicle market is deeply attractive. It’s a great time to be bullish on Ford, thanks to this major potential new growth avenue.
Ford’s year in share prices so far is basically three large plateaus. There was a jump in early January 2021 that took Ford from around $8 to nearly $11 per share. Ford then spent the rest of January into about mid-May around $11. That’s when another jump kicked in that took Ford to around $16. However, Ford lost a bit of ground after that and started a slightly downward-sloped plateau to about $14 per share, where it remained until early October. Ford then caught a major upward movement, going from $14 to just over $20 in about two weeks. Subsequently, Ford’s share price made a serious play for $22 before slipping back to around the $20 level, which is where we are today.
The latest news should make Ford even more attractive. Not only is Ford re-opening the purchase order market for its Lightning F-150 pickup, but it’s also planning a huge new increase in production on that line. Previously, Ford shut down advance orders due to overwhelming demand. Now, Ford will make 150,000 Lightning F-150 models every year. This comes just a month after Ford’s plan to triple production on its Mustang Mach-E electric car line.
Wall Street’s Take
Turning to Wall Street, Ford has a Moderate Buy consensus rating. That’s based on 10 Buys, 5 Holds, and 3 Sells assigned in the past three months. The average Ford price target of $20.59 implies 12.98% downside potential.
Analyst price targets range from a low of $12 per share to a high of $25 per share.
A Huge New Product Line Could Revitalize Ford
Ford was never anyone’s idea of a growth stock. A company that’s been around for a century or so – anyone else remember the Model T? – has generally gone about as far as it can go. Ford is already bucking that trend, however, with its recent performance. Just look at Ford stock for the last five years. You can actually see the crater left by the pandemic. You can also see the nine months that Ford took to claw its way out of said crater to resume its plateau around the $9 mark, where it had been since at least 2017.
Then you can see the spike that kicked in back around September. That took Ford from “moderate gains” to “how did Ford double its share price in less than a year?”. It’s tempting to say that all the gains are directly connected to Ford’s explosive new lineup of electric cars. It’s at least partially true, after all. Electric cars helped drive Ford’s massive growth and made Ford the top growth stock in the auto industry for 2021. That includes Tesla. Ford managed to hit not only a five-year high, but also a 20-year high on December 10, after the announcement of tripled production on the Mustang Mach-E.
However, there’s more than just electric car growth to account for here. Remember that October 2020 saw the departure of CEO Jim Hackett, who was replaced by Jim Farley, an auto industry veteran who promised more transparency for investors. Its massive production infrastructure, including its Michigan plants, will give Ford a further edge going forward.
It hasn’t been all smiles, sunshine, and open roads for Ford, though; recent reports suggest that the new Bronco’s soft top lets in quite a bit of snow during heavy snow conditions. The pictures that accompany said reports are a sight to see; of all the interior options Ford offers, “frosted” is not on the list. Nor should it be.
Also, there’s the matter of Ford’s dividend history. The dividend recently dropped from $0.15 to $0.10. Ford hasn’t had a dividend that low since 2013. The company held to a $0.15 dividend for most quarters starting in 2015. However, in January 2020, the company halted dividend payments, likely due to the pandemic. The company restarted dividends back in November, which is likely a welcome sight for investors and should continue.
Concluding Views
Despite a few minor hiccups, Ford is racing ahead. It was 2021’s top growth stock in the auto industry, an amazing feat for a company that’s been in business for over 100 years. Realizing further growth isn’t that outlandish either. It’s making a major new push in the electric market, and it still has plenty of life left in the internal combustion sector as well.
Looking for Ford to continue its growth isn’t an outlandish proposition. It’s already demonstrated its ability to produce cars that people want. With a major new market firing up in the electric vehicle sector and Ford already possessing the infrastructure to meet the demand, Ford could well beat Tesla at its own game. I look forward to seeing if it can, and I remain bullish on the chance that it will.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
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