Ford is Still Rolling Along
February 2, 2010
Today Ford reported a 25 percent jump in January U.S. sales, thanks in part to Toyota's sticky gas-pedal. We blogged back on January 5, 2010, that on a Price to Sales basis Ford could support a ratio of around 0.4 (current P/S is 0.29). This would equate to a share price of around $16.
We still believe that by the year end this target should be achieved, and any market related weakness during the summer could be a great buying opportunity. The other great positive for Ford, Generation Y loves them
It may be hard to believe that since the market high marked by the S&P Global 100 ETF (IOO) in October 2007 the best performer between Ford, Emerging Markets ETF (EME) and the S&P Global 100 ETF (IOO) is Ford by a wide margin, with a gain of 32 percent versus minus-10 percent (EME) and minus-27 percent (IOO). Who would have thought!
Since the March 2009 lows the returns are even more in Ford's favor: 550 percent versus 94 percent (EME) and 68 percent (IOO)!
How long can it last? Momentum knows, but if we study the price to sales ratio of Ford from 1970 it would appear the stock runs into turbulence around 0.40 versus today's figure of 0.27. That would equate to a simplistic target of around $16.00, or about 48 percent higher than today's price of around $11.00.
The last time Ford was $16.00? January 2004.
Source: Ned Davis Research
Market Watch: Ford Motor Co. reported Tuesday a 25% jump in January U.S. sales thanks to a wave of momentum, while Toyota Motor Corp. suffered an expected blow in the wake of its sticky gas-pedal recalls.Separately, General Motors reported a double-digit improvement and gave an upbeat outlook for the rest of the year. Chrysler's sales, like Toyota's, declined.
"These industry numbers aren't going to light the world on fire, but they do indicate that the steady recovery is still working," TrueCar.com analyst Jesse Toprak said. Dearborn, Mich.-based Ford (F) said it sold 116,534 cars and trucks last month, up from 93,506 vehicles a year earlier, attributing the gains to strong demand for its fresh car lineup and a surge in its fleet business. "Our balanced fleet business has come back, and we view this as a very positive sign for not only Ford but for the economy," Ken Czubay, head of Ford's U.S. sales and marketing division, said in a conference call.
