Is it a Good Time to Buy Ford?

Posted by: Lauren Young on August 10, 2009

A reader sent me an email today asking if it is a good time to buy Ford (F) stock. In turn, I asked my sources in the investment world what they think. I’ll be posting their responses as they filter in.

Here’s what Martin Weiss, founder of Weiss Research and several investment newsletters, has to say:

Anyone recommending Ford today is probably basing it on the shaky premise that:

(1) The recent pick-up in auto demand is sustainable;

(2) The U.S. auto industry somehow has restored—or will restore—its competitive power;

(3) Ford shares still provide good value despite their sharp rally—from $1.26 per share last November to $8.44 last week.

This doesn’t meant that Ford shares cannot move higher, Weiss says. “They may do just that. But the auto industry recovery is driven more by unsustainable government bailouts than lasting growth in demand, and Ford will have long-term difficulty competing,” he says.

Bottom line: According to Weiss, buying Ford shares now is not an investment. “It’s a high-risk speculation,” he says.

What do you think? Does Ford’s recent uptick signal that the worst is behind the company now?

Reader Comments

Amara Moosa

August 10, 2009 5:50 PM

No Ford's recent uptick is not a signal that the worst is behind the company. The cash for clunkers program has drastically increased the number of cars people are buying. When money dries out, majority of the population in my opinion will not buy cars especially Ford. The government is strongly backing these companies, but we all know, the government will soon retreat when signs of stability loom arrounds. Ford is only a good buy when GDP figures shows growth in the auto industry until then, the stock should but traded short.

Oh My Goodness!!!

August 10, 2009 7:02 PM

Growing up in the 50s and 60s was GREAT; the NEW cars coming out in mid Sept made going back to school very bearable....along with football! but after all the lies, cheap huckstering, the corruption of Congress with campaign contribution to avoid any form of RESPONSIBILITY, has led us to forever - yes, FOREVER - abandon detroit and the goon squad at the UAW. It's been 22 years since we bought Ford (2x in 80s) and if it is NOT the garbage they produce, it's the dealers. But Toy and Honda need to curb some of their dealers SHODDY practices and ineptitude; RELYING on the surge in demand has led them to BELIEVE they can't end up like Chrysler and GM. Believe me when I say, there IS Subaru, and the SHOCK of my life, a couple of Korean cars that represent the real FUTURE, to say nothing of the Godzilla of manufacturing - China!

kuei

August 10, 2009 7:02 PM

I think Ford has national support and alot of potential new customers since they have not declared bankruptcy or taken bailout funds. If there is one company that will come out ahead in this market it is Ford. They seem to be the only auto company with their heads screwed on straight. I love my Ford and Lincolns and would not jump ship on a company that keeps providing me with a quality product. I used to be a Chevy fan when I was young. Then I decided I preferred to drive my cars instead of having to work on them constantly.
Right now I think Ford stock will come down a bit. Not much. But for the long haul I would bet on Ford.

Shirley Billingsley

August 10, 2009 8:42 PM

Now, is not a good time to buy a Ford or any other new vehicle. I know that the consumers are grabbing at the chance for the big dollars off signs, but they are not looking at the big picture, and what comes next, in the future.

D-Man

August 10, 2009 9:25 PM

Forgive me for saying this, but screw all these car companies that screw us. I think that if your car runs and drives then it is Redundant, if not anything else to even think about buying a new one, when you could use the money for more important things. That is my honest opinion.

Pat

August 10, 2009 9:28 PM

While certainly there's still a lot of speculation and uncertainty around Ford and whether they can be competitive. Here's some facts:

- Ford is continuing to cut costs by driving engineering efficiency in their lineup. There was a recent story which said that F plans to refresh 90% of their global lineup as more models sport same or similar frames and parts. Commonality is key.

- Ford is the only company which did not ask for bailout money. A lot of average Joe's I know take that into consideration.

- F is continuing to take market share from Japanese automakers due to increasing quality in F products. Not quite there yet but they're getting closer. A friend of mine working at F said that they're learning from their European counterparts in how to make high quality products more cheaply.

These point to sustained growth. There are however MANY things to consider too:

- The global economy is not showing any signs of strengthening, putting a lid on consumer demand

- F, along with many other car firms, rely on 1990's style car sales to sustain growth and profitability. Those days are long gone.

- All the great innovations and drives in efficiency won't matter a lick if Chinese cars get granted access to the US market. I saw a car made by BYD - a battery company and domestic car company. BYD makes roughly 60% of the world's lithium-ion batteries. They also make pretty good cars, and they're learning how to meet the US strict safety standards the best way the Chinese know how - stealing US data - from GM and other American cars and German cars. Further, they've boasted that the Chevy Volt will get 20 fewer miles on a single charge than their car they're developing specifically for the US market, and their car will cost $15,000 less.

D-Man

August 10, 2009 9:33 PM

Forgive me for saying this, but screw all these car companies that screw us. I think that if your car runs and drives then it is Redundant, if not anything else to even think about buying a new one, when you could use the money for more important things. That is my honest opinion.

Bob

August 11, 2009 12:11 AM

I have had a good feeling about the future of Ford. Personally i have owned 2 fords over the last 16 years (one i'm still driving.) They have been very dependable and both get 25 mpg hi. 20 city. I wouldn't consider a toy or honda when i know we still make good cars right here in the good ol USA.

jack

August 11, 2009 12:29 AM

As a shareholder in Ford for many years I follow them very closely. I have to agree it may not be a good time to buy Ford stock due to recent gains but it sure was in Nov. The stock will pull back and rise to 11 by next year on continue strong sales. Too many good things happening in the company from the top down. Mulally is a brilliant man. It would be in your best interest to pay attention to what he's doing with Ford. Don't doubt his ability to turn Ford into the #1 car company in the world given time. He's that sharp.

Robert

August 11, 2009 6:54 AM

lol, omg... i cant believe the ignorant things i've read on this post. Are you people for real? do you even watch the news? Ford is by FAR the doing the BEST out of US car companies. Pat has the facts correct.

I dorve a not so great Ford in the 80's lol, i also drove a VW that was totaly unreliable, and Honda that left me stranded more than once.
Cars will always be around and unless you dont need drive for whatever reason, you will always need one. Car companies have NOT screwed you more than any other large company has... they are just producing a product, a GOOD product, and DO NOT confuse the greedy "suits" that helped run once great copanies to the ground, with the vehicles themselves or the average joe who builds them. There is JUST AS MUCH greed, dirty politics and crap going on at japanese companies too...it's just not getting to the front page of the news.

Tristan

August 11, 2009 9:15 AM

I think manufacturing in the US will be a good sector to invest in the future. The US dollar is a ponzi scheme and I expect it to depreciate dramatically. On the plus side this will make manufacturing in the US competitive again. If the big three can reduce UAW wages and make small cars then I think the future is bright. As for the rest of the US - expect lower purchasing power and much higher oil price.

Town Crier

August 11, 2009 10:05 AM

To "Oh My Goodness", Ford's 1980 products are NOTHING like what they currently produce. Ford products are now on par or better than than comparable Japanese products. You can back that claim with data from Consumer Reports and JD Power. My '76 Pinto was a pile of junk, but my 1981 Escort was as good as my girlfriend's 1981 Toyota was. Every Ford I've owned since has been better and better. Your experience from 25 years ago is obsolete and certainly not relevant to today's Ford product.

Loki

August 11, 2009 10:20 AM

Totally disagree. Ford is competitive with the Japanese, Koreans, Indians and Chinese. Sales in China picking up. Just set to introduce IKON iKool in India on Aug 12 and will make a big splash. The cash for clunkers program did not give much of a boost to Ford because they were not giving out as big of incentive as ere the other two government motors corps. Ford picking up strongly in Europe and will continue to do well. Has taken over as number one in Canada and will do well. My prediction - thanks to profit booked on debt retirement, Ford actually at $800 million to good for first half this year. Will have a surprise profit for the last two quarters and show up with at least $1 per share unexpected profit for 2009 and stronger than expected $2-$3 per share profit in 2010. And then it keeps getting better as America returns to the company that Henry built.

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About

Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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