Thursday, March 18, 2010

Ford, a strong turnaround.

Ford(F) was beaten up very badly a year ago, when there was problem after problem with the U.S. auto industry. That was reflected in the share price, 52 weeks ago the stock was trading around $2.50, today the stock is over $14. Yesterday there was excellent news for both shareholders and debt holders as Ford received an upgrade from Moodys to B2. Also F has outperformed many of its competitors with regards to the quality of its product; it has exceeded the quality of Volkswagen, Chrysler and Suzuki(http://www.chicagotribune.com/classified/automotive/chi-jd-power-vehicle-dependability-study-031810,0,1477320.story). Its market share has also increased its market share up to 19.2% in March 2010 from 14.6% in 2009.
Possibly one of the things that I put the most value on is that Ford is bringing the new U.K. versions of the Focus and Fiesta to North America in 2011. This is significant because the Ford focus has been the best selling car in the U.K. for 10 years, and the Fiesta has also done very well in the subcompact class since it was debuted. Currently 7,000 Americans have pre-ordered the Fiesta. While the number is not massive, for a sub $20,000 car its nice to see consumers wanting to buy the car already. Pre-orders show that there is some hype around the release of the car, and this may bode well for initial sales of the car.
I feel that with enhanced quality control, and new successful cars that have been shown to have strong sales internationally 2010 will be a very good year for Ford. The destruction of Toyota's perfect quality image has done nothing but help Ford. Honda has also recalled several thousand cars. As the Japanese auto makers are no longer viewed as bullet proof, and Ford has increased its quality the gap in consumers mind's between the Japanese and North American auto makers has shrunk. With all of this Ford will make a very good investment for the rest of 2010 and well into 2011. As America starts to emerge out of this recession, individuals will likely increase spending on new cars. Ford stock in my opinion will hit over $17-18 by fall 2010, and by 2011 the stock may be well over $20.

No comments:

Post a Comment