Ford's Domination Of Planet Earth Is On, Or Ahead Of, Schedule

Jul.17.14 | About: Ford Motor (F)

Summary

Much of Ford's future growth is going to be attributable to success the company is having in China and Europe.

It was announced this morning that Ford is now also making an investment into South Africa.

Affluent culture attracted to luxury vehicles, combined with a coming 55% rise in driving-age citizens by 2023 should fare well for Ford.

"We think there will be significant opportunity in the continent of Africa. It's right at the takeoff curve. It's really going to be growing over the next few years."

- Jim Benintende, Ford Operations in Middle East & Africa

For a while now, I've been predicting Ford's (NYSE:F) slow ascent up towards the $20 mark, where I feel the company is fairly valued. If you want to read the latest in my series on Ford, you can check out this link here, which will list all of my pieces on the name.

The stock has continued its slow climb upward over the last couple of weeks, with the 50-DMA crossing up through the 200-DMA - a bullish sign for technical traders. It has now provided 15.4% returns since I named it one of my attractive trades for 2014 at the beginning of the year.

The company still remains modestly priced versus the S&P.

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I've been a Ford bull since early in 2013. Coming out of the U.S. auto bailout phase, Ford was the lovable underdog due to it not taking bailout funds from the U.S. As we can see in the case of GM, it's not necessarily evident that the bailout was a genius idea, in its case.

I was a long-time critic of U.S. automakers and someone who watched his family's Pontiac fall apart time after time after time growing up. From that point on, we were a foreign car household. After the auto bailout, however, I befriended some car enthusiasts and started to take a bit of a shine to the "new" Ford.

Ford continues its recovery from the auto bailout days, and new news was put forth this morning that the company is looking to expand its name into Africa. Seeking Alpha reported:

  • Ford aims to grow quickly in Africa and the Middle East through the introduction of 25 new models in the next two years.
  • The automaker forecasts industrywide sales in Africa will shoot up 40% to 2.1M vehicles in the next six years.
  • Ford earned a profit of $54M for the Africa and Middle East region in Q1, a mark some analysts see doubling by next year.

The goal is going to be to have the right-hand drivable Mustang at dealerships in Africa by next year.

Several articles have noted that the driving-age population in Africa is going to grow significantly - by 55% some outlets guess - by 2023. This is going to be an entire new untapped market for automotive dealers on the continent.

By unveiling the vehicle in an affluent area of South Africa - Sandton - the company looks to make an impact as a semi-luxury brand. An article in The Wall Street Journal this morning notes that Ford will share real estate with neighbors Ferrari and Maserati. Ever heard of them?

Providing a little bit of class behind the name and the high-powered vehicles in Ford's line is likely a good move. Companies like Apple, I've noted in the past, do well by suggesting and carrying a luxury element to them. It was really evident in the iPhone 5s sales blowing the iPhone 5c out of the water - especially overseas.

And overseas is where Ford is excelling.

IAE Research put out a great piece days ago confirming the company's strong growth internationally:

European sales increased by 6.6% in the first half and slightly outperformed the industry average of 6.3%. This is due to the company's highest first-half sales volume since 2011, which stood at around 605,400 vehicles in 20 traditional markets in Europe. Moreover, the pricing environment in the region remains extremely competitive, and the company managed to retain its market share at around 7.9% in the European market.

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Source: Ford News Release, July 2014

This, again, comes on the heels of reaping the fruits of the company's investments in China.

  • Ford (+0.3%) reports sales in China rose 35% to 549,256 for the first six months of the year.
  • The automaker saw sales in June increase 17% to 87,783 on broad demand across models.
  • Ford sells cars in China through both Ford China and Jiangling Motors.

These China numbers prompted me to say, in my last piece:

Ford continues to penetrate into what is the biggest auto market in the world, and this continues to validate my bullish sentiments behind the company. As long as the international data continues to bode well for the U.S. automaker, I won't think twice in suggesting investors hold here and wait until we test $20.

I see the move into Africa and other emerging market countries as fantastic ways for Ford to continue to pave its own growth. I continue to contend that it's a great time to be a Ford shareholder, and that there's upside to the $20 level - likely before the end of this year.

I remain bullish on Ford here. Best of luck to all investors.

Disclosure: The author is long AAPL. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.