F. All Trucked UP?

Ford. All trucked upGraphic, STOCKjAW banne, Quality View

DECEMBER 31, 2019

Find

them anywhere from Key Largo to Shenzhen. Ford’s vehicles roam the planet. Their problems are planet-scale as well. Planets are moving targets, and so is business.  How many people even want to own cars anymore?

 

Ford’s moving as well, away from sedans and directly to electric drive. Their playbook calls for a stable of 40 EVs within the coming twelve months. Many exist now. Think the sparkling new Mustang Mach E. Can investors take an electrifying ride along with a company amid wholesale transformation? We take a quick look to see if you can. “F.  All Trucked UP?”(Cover photo; the 2020 Ford commercial Transit.  It and the Transit Connect own Europe.)

 

 

Ford 2020-Shelby-GT500
The absolute; 2020 Ford Shelby Mustang GT500.

Being

Ford just now is no breezy stroll.  It’s tough for all auto makers.  International auto sales are flat at best.  Gas is the past.  Even the concept of ownership is being challenged.  Do you know anyone who views their car as a personal statement?  Yet Ford’s issues also include a Chinese sinkhole known as a “joint venture,” the death of the sedan in America, that same JV also vulnerable is the midst of a trade war, and attempting to rebuild itself in the churning uncertainty of said trade war.

 

 

How does F’s share price contiune to battle through with such stability?  Of course, one fat ass dividend, in a time of uncertainty for growth. 

 

 

Is Ford investable now?  What is Ford?  A turnaround story, with an all electric version of it’s classic Mustang, called the “Mach E.”  “Reservations are full” the company announced Monday.  $500 refundable deposit and you’re good.  And the turnaround part?  “The Mach E has become a high-profile test for the restructuring that has been marred by profit warnings, costly quality problems, and the troubled launch this year of the Ford Explorer sport utility.”–Reuters, 12-30-19.

 

 

Ford Mustang Mach E
A $500 deposit and you’re on th e list for one of Ford’s brand new Mustang Mach E electrics. This Mustang’s an SUV. Does that designation actually mean anything anymore? Call it what you like, but this is a 2-door EV sedan.

Most

will tell you that a 7% annual equity return is a reasonable thing–it’s average.  But 2019 created blow-out growth.  Even Ford benefited.  YTD F’s returned 21.2%, while GM only saw 8.9%.  And Tesla blew Ford away right?  TSLA YTD return 23.9%.  Tesla’s 2019 performance was back-loaded, 6 month return 84.5%, but with great difficulty and turmoil.

 

 

 

Ford Motor Co. F:NYSE, 12-31-19

ford-12-30-19-weekly.png
X indeed marks the spot. Ford, a disaster in slow motion. From 2012-2019, F has fallen as its’ S&P 500 benchmark has risen. Chart does not include dividend, but than, so what? Yet is this the whole picture?(SJChart)

But

what could account for Ford’s recent stabilized range-bound price-action?  See chart below.  The rush to safety earlier this year drove the price of dividend investing sky high.  Ford currently offers such income investors an overflowing 6.4% yield, for a 7.5 forward P/E.  That’s blood bait.  The very same investors are now seeing AT&T(T) at a 5.3% yield, on a forward P/E of 11.

 

Big name consumer product companies such as these offer stocks connected to businesses that make sense to most.  Think JNJ.  Complex businesses in obscure endeavors are not go-to favorites in uncertain times.  Nor do they usually sport big payouts.

 

 

Ford Motor Co. F:NYSE, 12-31-19

Ford, 12-31-19, weekly
At year’s end we see Ford in radical transformation. As the sedan business thins EV’s lead the way for F–40 currently slated for release. GM faces the same. Can anyone claim that the Golden Age of motoring isn’t over?(SJChart)

Ford’s

stem-to-stern makeover will require years.  But investors know that.  Institutional money and retail fund mangers will continue to accept that, as long as it pays.  Ford will be richly rewarded when it’s operational and product line rebuilds really begin to shine, and they will, in time.  Think GE–a decade-long wasteland of brute failure, and still in massive debt and structural trouble, and yet widely owned by perky supporters.  What if Markopolos is right and GE’s a sinkhole of fraudulently hidden debt?  Enron.  WorldCom.  Remember Health South?

 

What does Market Edge say about Ford’s current technical condition?  “The technical condition of F is strong. The chart pattern suggests that upward momentum should continue and the stock is positioned for higher prices.”   Maybe so, yet F hasn’t yet recovered from it’s technical “Death Cross” suffered back in late August.

 

We feel that if F can continue paying it’s fat dividend, the payout will continue to work as a stabilizing attraction.  But it’s troubled.  Right now the payout ratio is a whacked and critical 162.8% of free cash.  Oops.  Never good.  Further, F’s been a long-term disaster.  A five year stint in F’s shares, with reinvested dividends, would have netted you a cool -13%.  Oh boy.

 

Nonetheless, teams of institutional money managers have been firmly invested for all of that mad splintering spree.  Why?  Because fund mangers habitually view dividend-paying large caps as havens of safety, ones difficult to criticize over the longer time horizons, regardless of horrifying long-term charts.  F reports on February 4th.  Expectations are low.  How could they not be?  The worldwide auto business is struggling.  We’re staying in, while watching every press release.  Really.  Maintain a longer-term perspective, or sell on strength, before Ford tells it’s Q4 story. 

 

 

Catch the whole story on Ford.  Simply search Ford through our search box.  Or begin here with

Ford.  Fabulous Still?

https://stockjaw.com/2019/08/02/ford-fabulous-still-if-it-runs-on-gas-its-time-is-running-out/

Graphic, cover, Ford Fabulous Still, UPDATE

 

 

When you feel good, it shows.

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2 thoughts on “F. All Trucked UP?

  1. nice!, I still think Carvana will outperform all OEM’s. What da ya think about them other than they are nose blead expencive and KL:- Thought U were going 2 do that next? Fitz

    Like

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