One of my general rules of investing is to never invest in an entity that has a high unionization rate. These firms can be upended by labor actions, tend to be less productive than non-union shops, and usually have higher labor costs as well. I am going to break this rule for the first time in years by taking a small position in Ford Motor (NYSE:F). The cheap manufacturer seems to be hitting on all cylinders, has the best CEO in the business, and has some recent positive catalysts as well.
Here are a few recent positives for Ford:
- The company announced yesterday that is it doubling its dividend payout.
- In addition, it also said it will add 2,200 white-collar jobs, which is a solid acknowledgement of its confidence in its long-term future.
- Goldman Sachs just added Ford to its conviction buy list.
- Jefferies also came out yesterday and raised its price target, as well as reiterated its "Buy" rating on Ford.
- Stern Agee raised its price target to $17 from $15 on Ford.
Ford Motor is the second-largest auto manufacturer in the United States.
Here are four reasons why Ford is a good income and value play at under $14 a share:
- After doubling its dividend payout, the shares yield a solid 3%, which should put nice floor on the stock.
- Ford has done a much better job of rationalizing its costs in Europe than General Motors (NYSE:GM), does not have the overhang of being "Government Motors," and its Chinese sales increased more than 20% in 2012 to over 600,000 vehicles.
- Even after a nice move in the stock since last summer, the stock is still priced at just 9.5 times forward earnings.
- The company has beat earnings estimates for three straight quarters. In addition, after falling slightly in FY 2012, revenue growth is expected to resume in FY 2013 with analysts projecting a 4% to 5% sales increase in the new year.