Seeking Alpha
Long only, contrarian, special situations, value
Profile| Send Message|
( followers)  

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:

  1. After doubling its dividend payout, the shares yield a solid 3%, which should put nice floor on the stock.
  2. 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.
  3. Even after a nice move in the stock since last summer, the stock is still priced at just 9.5 times forward earnings.
  4. 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.
Source: Finally Sold On Ford