Thursday, April 14, 2011

Ford Motor Company (F, $14.75)

(May 16, 2011 update: All future stock posts will appear on my new subscription-only website at Please visit!)

Ford Motor Company (F) is a worldwide producer of cars and trucks. Its business operations are split into two segments, Automotive and Financial Services. Unlike its U.S. competitors GM and Chrysler, which were heading into bankruptcy and required a bailout from the Federal government, Ford is a profitable company with a successful business plan. Read more here.

Ford's profits have been increasing steadily, often surprising Wall St. in recent quarters, and with a price/earnings ratio (PE) of 7.9, the current price represents an extreme value for a growing company.

Ford stock reached its all-time highs more than a decade ago, fell in price during the 9/11-induced recession in the early 2000's, got stuck in a trading range, and then fell again during the financial meltdown of 2008. The stock has recovered from these two economic downturns, and should be an interesting play for both short-term traders and longer-term investors.

The current trading range is $14-$18 per share. I expect the stock to climb above this trading range this year as the company continues to pay down debt, compete aggressively against Toyota, maintain its #2 position in the U.S. automotive market, and surprise Wall St. with upside quarterly earnings reports. A short-term trader could easily make more than 10% profit, and for those with patience, Ford stock could be a star of their 2011-2012 stock portfolio.

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The Right Huff is Crista Huff's blog for politics and items of sociological or financial interest. Crista Huff also managesGoodfellow LLC, a subscription-only stock market website. We strive to identify financially healthy companies in which traders and investors can buy shares and earn dividends and capital gains. Seedisclaimer for the risks associated with investing in the stock market. See your tax advisor for the tax consequences of investing. See your estate planning attorney to clarify beneficiary and inheritance issues associated with your assets.

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