Stock Analysis & Ideas

Ford Stock Could Outperform Tesla in 2022

Ford Motor (F) stock has had an incredible year, surging over 118% year-to-date on the back of a handful of better-than-expected earnings results. Indeed, Ford can go four for four if its fourth-quarter results continue the trend.

As analysts continue raising the bar, though, could Ford face a stumble, or could its EV ambitions warrant further multiple expansion on the stock?

With an ambitious EV spending plan in place, I think Ford still represents an incredible value at around $19 per share. Undoubtedly, Ford could give Tesla (TSLA) a good run for its money in as little as three years.

For a fraction of the valuation, Ford stock appears to be a far better bet than those overhyped shares of Tesla. As shares in the two auto giants continue moving in opposite directions, I’d prefer Ford any day of the week. I am incredibly bullish on Ford stock.

Ford’s Massive EV Spend Will Likely Pay Off Big

Ford looks to be in a much-improved spot with its capital allocation. As the iconic American automaker continues funneling money into next-gen EV (and autonomous) innovations, the firm also has more than enough cash to chip away at its debt load.

Although the firm has plans to reduce debt, one can’t help but think that Ford will need to continue investing very heavily to knock Tesla off the podium. While Ford’s debt-reduction plan is encouraging, it isn’t its number one priority at this juncture.

Earlier in the year, the company announced its intention to hike autonomous and EV car spending to $37 billion through the end of 2025. That’s a remarkable sum, to say the least.

If Ford can continue crushing it on earnings, further spending hikes shouldn’t be ruled out. Indeed, things are looking up for the firm as it continues showing signs of turning a corner and effectively adapting to the new age of autos.

An Electrifying F-Series: A Top Catalysts to Look Forward To

With the electric F-150 Lightning poised for lift-off in the new year, investors have the right to be excited as the firm marches into the EV space in style, with powerful brands in its corner of the ring.

Tesla has been a force to be reckoned with for quite a while, but I think its best days are behind it as the EV market is about to get that much more crowded, with competitive pressures slated to mount in 2022.

Further, Tesla’s truck offering, I believe, could really fall short of the competition as Ford and Rivian (RIVN) look to become the kings of the electric pick-up.

Indeed, the F-series line of Ford vehicles will bring a ton of loyal fans who have stood by the brand for many years. Pre-orders are impressive, and there are reasons to believe that Ford could be overwhelmed with demand as the transition towards electric takes its next big step.

Mustang Mach-E: Another Auto That Could Hit Tesla Where It Hurts

With the Mustang (another iconic American brand) Mach-E poised to get a much-needed production ramp-up, Tesla’s Model X crossover also faces immense pressure.

Simply put, the opportunity at hand in F stock is quite electric. Any significant gains for Ford could bring a big hit to Tesla.

Wall Street’s Take

Turning to Wall Street, Ford has a Moderate Buy consensus rating, based on nine Buys, three Holds, and three Sells assigned in the past three months. The average Ford price target of $19.50 implies 1.7% upside potential.

Analyst price targets range from a low of $12.00 per share to a high of $25.00 per share.

Disclosure: Joey Frenette doesn’t own shares of any mentioned companies at the time of publication.

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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