Ford Cruises Toward Online Black Friday Sales

| About: Ford Motor (F)

Ford Motor Company (NYSE:F) is benefiting from online sales, which currently drive a quarter of all its retail sales. Black Friday is a big event for Ford, as last year's holiday shopping season kick-off was overwhelmingly the company's top day for tire sales. The stock has had a great year and the company is pointed toward continued innovation to answer the demands of consumers who want fuel efficiency.

Online Strategy

Last year the company saw a 17 percent increase in online sales leads for Black Friday. In 2013 Ford Motor expects to see increased online research and purchasing from its customers. Ford positions itself to convert online interest into dealer visits, which is a strategy it calls "digital dealer opportunities." The strategy originated in 2000 and in the last few years it has seen significant results. It includes one-to-one marketing campaigns that have generated up to 30 percent increases in sales and service.

FordDirect is a partnership between Ford and its dealers to engage with customers online. This joint venture has produced marketing solutions for web development, traffic generation and social media. The reason for this emphasis on the internet is that consumers now do much more research online than a decade ago before they make purchases. Google (NASDAQ:GOOG) Trends has revealed that the Ford F-Series is the number one searched vehicle in its search engine for November 2013.

2015 Mustang

Ford Motor is redesigning its Mustang, in which the 2015 edition will be unveiled at MLive in Los Angeles on December 5, 2013. Mustang sales fell off during the recession and haven't yet recovered due to consumers gravitating toward fuel efficient vehicles. Annual sales have been under the 100,000 mark for five straight years while the economy models Fusion and Focus have each surpassed the 250,000 mark.

But Ford will still give muscle car fans who idolize the classic Mustang a V8 engine and there's talk it will be as powerful as 450 horsepower. At the same time the company will offer a leaner version of the Mustang with a turbocharged 2.3-liter "EcoBoost" engine with four cylinders at over 300 horsepower. CEO Alan Mulally says the new Mustang will appeal to a global market and emphasize fuel economy.

Other New Developments

Alternatives to gasoline are starting to become a growing concern for the automobile industry, as consumers have made it clear they don't like gas guzzling machines as much as they did a few decades ago when gas prices were much lower. Each of the Detroit automakers learned this lesson the hard way during the market crash five years ago that drove the city and industry into financial turmoil. So Ford has responded by developing compressed natural gas (CNG) vehicles set for next year, which could play out to be influential.

The first CNG-capable F-150 has just been completed for 2014. It will be the only half-ton truck that uses both compressed natural gas and liquefied petroleum gas. This 3.7 liter V6 truck will provide options for fuel type so that customers can decide if they want to pay lower fuel prices for CNG, which currently averages $2.10 per gallon in the United States.

Expanding with U.S. Jobs

A $150 million investment in Ford's Buffalo Stamping Plant will allow the automaker to create 350 new jobs. Ford Motor has also set a goal to create over 12,000 new hourly jobs in the United States by 2015. The company reported in a November 21 press release that it has already accomplished three-fourths of this goal. It also announced earlier this year it would hire 2,200 salaried U.S. employees for 2013.

The Buffalo facility produces parts for various models such as the F-250, F-350, Econoline and Focus. The parts include hoods, doors, fenders and dies. Ford credits the UAW and the government for helping make the investment and new job creation possible. Additionally, Ford is investing $16 billion in product development and manufacturing in the United States.

Financial Health

Fundamentally speaking, Ford is fairly priced at $22 with upside potential, according to Valuentum, which has a near term price target of $17. The automaker has strong financial leverage and modest growth. On the risk side, Ford has weak fundamentals in terms of average return on invested capital and concerns of capital costs. But as long as cash flow is healthy, it's not such a risk, especially since the company has improved operating margin and cut costs in North America.


The stock has advanced impressively in 2013, climbing from single digits to $17 per share. It's been in a holding pattern between $16 and $17.50 since July, but Black Friday may provide stimulation since the company expects sales increases. It's been a few years since the stock traded this high, but it seems to be in high gear for continued cruising.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.