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The news seems to be getting better everyday for Ford Motor Company (NYSE:F). One of its models, the Ford Focus, reclaimed the title as the world's top-selling car, while another of its models - the New Fusion - is closing in on Toyota's Camry. Its Chine sales grew by leaps and bounds, while its US sales are on the rebound. Nevertheless, its stock has been heading south. What's behind this disconnect between the company performance and the stock performance?

The Big Picture - the sluggish world economy, as evidenced by data out from Europe and the US. Most notably the recent weak US employment report and consumer confidence reports, which confirm a divide between Wall Street and Main Street. In fact, Ford isn't the only cyclical stock that has been heading south - so are the stocks of Caterpillar (NYSE:CAT), US Steel (NYSE:X), and Alcoa (NYSE:AA).

Simply put, investors are hesitant to allocate funds to cyclicals because they are concerned about world economic growth.

What should investors do?

As we wrote in previous pieces, Ford is a good long-term buy for five reasons: First, the doubling of its quarterly dividend, from 5 to 10 cents per share, an appealing proposition for today's low interest rate environment.

Second, Ford is seeing an improvement in economic fundamentals. With improving quality and the introduction of new models, Ford has been benefiting from a broader recognition of its brand - Ford's 2013 Fusion was named Car of the Year by AOL Autos. The company has further expanded its overseas presence, especially in China, where it is the largest foreign company. It is also expected to benefit from the backlash of the territorial disputes between Japan and China.

Third, the company is seeing improving financial fundamentals, especially in its profit margins. Ford was the only American automobile company that didn't receive government money during the 2008 crisis. Last year, both S&P and Fitch raised Ford's credit rating.

Ford Motor Company

Operating Margin

5.15%

Quarterly Revenue Growth

-2.6%

Quarterly earnings growth

-1.1%

Forward P/E*

7.04

Total Cash

$24.10B

Operating cash flow

$9.17B

*Fye Dec 30, 2013; Source: Yahoo.Finance.com

Fourth, Ford has been very aggressive in addressing its European market woes by idling factories, cutting thousands of jobs, and taking a $3 billion charge over the next two years.

Fifth, the introduction of new more-fuel efficient products that cater to different segments of the global economy, including the all-mew Ford Fusion and Mondeo, Escape and Kuga, EcoSport in South Africa, and B-Max in Europe.

A few words of caution: Automobile stocks are highly cyclical. This means they are exposed to fluctuations in the global economy. That's why I would constantly keep an eye to the fragile global recovery, especially in Europe where even France and Germany seem to be headed for a contraction rather than an expansion

Source: What's Wrong With Ford's Stock?