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Why Now Is The Time To Buy Ford

Apr. 04, 2022 1:39 PM ETFord Motor Company (F)111 Comments
The Asian Investor profile picture
The Asian Investor


  • Ford’s electric vehicle sales are surging.
  • Europe is going to contribute significantly to Ford's EV transition.
  • Ford’s EV production ramp is undervalued and its free cash flow is too cheap again.

Ford December Sales Plunge 17 Percent From A Year Ago

Justin Sullivan/Getty Images News

Right now, there is an opportunity to start, or double down on, an investment in Ford Motor Company (NYSE:F). The car brand is accelerating its transition to becoming a full-fledged electric vehicle (EV) manufacturer, and new product

This article was written by

The Asian Investor profile picture
I look for high-risk, high-reward situations. Five largest portfolio holdings: Bitcoin, SoFi, Alibaba, PayPal, Western Alliance. Early buyer of cryptocurrencies. I live in Thailand :)

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Comments (111)

Ford is a cyclical stock. The worst time to buy them is now. With the Fed poised to steeply raise interest rates and a recession likely looming, don’t waist your money on autos. Wait until this stock is back in the single digits next year.
Risk Advisor profile picture
Ford Otosan, a joint venture between Ford Motor Co. and Koç Holding, is now shipping the all-electric E-Transit cargo van to customers in Europe, Ford said Thursday.

The launch of E-Transit production at Ford Otosan's Gölcük plant in Kocaeli, Turkey, follows the February start of deliveries to customers in the U.S. from Ford's Kansas City Assembly Plant in Missouri.

The move marks the start of mass production after customers in Europe had placed over 5,000 orders before the E-Transit began rolling off the assembly line in Kocaeli, Ford said.

Ford Otosan’s Kocaeli plant is the heart of Transit production in Europe, and this celebration of E-Transit manufacturing starts the electrified next chapter in our already strong partnership,” Hans Schep, general manager of Ford Pro in Europe, said in a statement. “This is the first step in a transformation of the Kocaeli site which will see it become a major centre for electric commercial vehicle manufacturing in Europe.”
@Risk Advisor This is good news. I see this as F most important vehicle for profitability in Europe. What do you think?
Risk Advisor profile picture

Agree. That said they have lots of EVs scheduled to be produced in Europe in 2023 and 2024. Mr. Farley seems to believe that Puma-E will be very profitable.

Also there are also several vehicles which produce little or no profit which will be discontinued over the next two years including Mondeo which was announced this week.
Tdot profile picture
Reminder that the Mach E already is and has been profitable.



AND - from Ford's 2Q21 Earnings Teleconference:

Adam Jonas: My question on EVs, your BEVs. When do you think that they can be positive profit on a fully costed basis, not contribution. Like, when can they be profitable? And do you think it's 2022 is still too early for that?

John Lawler: Thanks, Adam. Actually, Mach-E is profitable. Contribution margin, positive and profitable on the bottom line today.

Adam Jonas: Wow.

John Lawler: We've got to ride that technology curve down. We've got to get to the $80 per kilowatt hour for the battery pack before the end of the decade. We've got to scale the BEV content. We have commonality, and the top hats, and other components that will help us as well. And then, of course, we need to build on our services and such to really improve the profitability of the BEVs as we move forward. But I can tell you that Mach-E is profitable today.

Adam Jonas: Wow, that's incredible at 50,000 type run rate for that to be correct.
Electric cars will not work for Ford long term.

The future of personal transportation is not going to be electric cars. It is going to be electric public mass transport. Buses, trollies and light rail for away from home. And for close to home, walking and bicycles. It's already happening. Check youtube videos for large cities outside the US. Tokyo for instance. Most do not drive cars at all. In Europe many city centers are almost devoid of cars.

Many, many reasons. But one can't be escaped.

The future is going to be without oil, gas including LNG and coal. And in the US, nuclear will not be allowed on a big scale (also not in Germany, but the French have interestingly enough a different view).

Point being? When they get through changing things, it will be wind and solar almost exclusively. And that will not power a nation, even if you papered every house and the Grand Canyon with solar panels. So the resulting electrical current won't power or permit a nation wide fleet of EVs.

Sometimes just recognizing the truth about things is helpful. And Ford should be listening before betting their entire future...
RickJensen profile picture
"It is going to be electric public mass transport. Buses, trollies and light rail for away from home. "
IMO, not so much. COVID changed everything.
@RickJensen To pick out one country, Germany, there are three things going against them on energy. One, the Green Party, a synonym for Socialist Far-Left. Which is well known. Two, dislike of nuclear. But both those are now combined with Russia/Ukraine, which is doing more for solar panels and windmills than any government policy to date.

So, rationing of energy is definitely on the table in the EU (don't know about the UK). It's been mentioned by their politicos. It just hasn't hit the US yet to that degree. Here I believe it will be more self-inflicted.

And I don't see how on earth individual use EVs can have a meaningful place there. I'm assuming of course that the reluctance and outright disinterest many Americans feel towards EVs, for personal and practical reasons, will be disregarded by government and cast aside once the official steamroller gets moving on it. Strict rationing of electrical power will no doubt be inevitable.

Some in positions of authority have in unguarded moments said so.
RickJensen profile picture
I'm not saying I'm right. It's just that's where I'm putting my money.
EU infrastructure is uniquely set up for standardization. They have much smaller distances and much higher density.
In the US, not so much.
F150 volume about to dry up. Nobody wants their 60k trucks with $5 gas

Or it is all the more reason to buy the F150 hybrid.
@Stewart Foreman if they can build any
Risk Advisor profile picture

Except the tens of thousands if not more of small business owners who write the truck off as a busines expense annually.
I can‘t understand people who suggests to buy tesla at PE 130 PS 14X . Ford PE 8,99 PS 0,3.
If I want to invest in EV surely I would buy ford
@Celestinogreco in a recent research analysis, it is projected that F will produce 2 million EVs by 2026. And it adds that TSLA probably will meet that by end if 2022.

Is that a good enough reason?
RickJensen profile picture
No it isn't. You pay $22.82 for every dollar in sales.
With F you pay, .45, not even a dollar. You are buying 50.7X as much for each dollar of profit generated.

But that's a Tesla bull for you, only watch price and units. Don't bother looking deeper, because you won't like the fundamentals.
@RickJensen actually the research author had recommended F as a buy before it dropped 34% and he is re-evaluating buy/hold at this level. And in all honesty, I skimmed the report so I really don’t know the conclusion. Thanks, not interested!
Ishi Kenjo profile picture
Buying Ford before a recession while they are having supply issues and trying to transition from gasoline to ev? No thanks. If I want ev (stock or the car) I buy Tesla, not F.
RickJensen profile picture
@Ishi Kenjo
Of course, you are in the cult.
@RickJensen Arent you the same person that thinks a ICE car can idle longer than a BEV? Hard to take you seriously.
RickJensen profile picture
Ok lets do this...

"Sorry, I am correct. BEVs on average can last longer."
--You can't know that (as usual). You would have to know how many are out there with resistive heating vs heat pump. Now you didn't know that, but I do.
Whether you try to change what you said "on average", and anything with no basis, and no DD, just shows, you made it up.
So, then you throw down again with "Model S or X can last 200 hours".
Just make it up, no details, no basis.
"Tesla moved away from the resistive heater, which uses a heating element that converts electrical energy into heat, in the Model 3, the Model Y’s sister vehicle."
"Based on his test, he concluded his 2019 Model 3 without the heat pump required 2,170 watts to maintain the temperature. The new 2021 Model 3, on the other hand, needed only 735 watts."
"75 kWh battery pack size, at 735 watts per hour, is exactly 102 hours (To a dead battery)"
"That is why a Model S or X can last 200 hours and no ICE can do the same."
So since you lost the "facts" argument, you decide to change what we were talking about. Now it's just 2 cars,....... and not EVs.
Now to the 200 hours.
"Our Tesla Model 3 can keep its interior at 65 degrees for almost two days max, losing an average of 2.2 percent of its charge per hour, which is barely less than a gas-powered car."
2 days is not 200 hours. Specifically:
"it could theoretically last a maximum of 45.1 hours, or just under two days."
Then comparatively:
The Tesla, couldn't even keep up with a ICE Hyundi Sonata.
The Hyundi could idle for 51.8 hours and the Tesla for only 45.1.
You simply make it up as you go along. As I said " you selectively pick only the optimal, and present it as a standard." Then you change the argument.
"To be clear- An ICE can idle on a full tank of guess for about 30 hours. A BEV can do it for 200+ hours in moderate temps, and still signifigantly more than an ICE in really cold temps."
Now a smart person would stop here. " At least Gruss, when proven wrong, has the decency to go away with his tail between his legs and be quiet."
Let's see what happens here. Keep digging that hole???
Apr 5, 2022. 12:57 PMLink
BlackNapkin123 profile picture
Put a buy in at 15.71 for 800 shares, I’m maxed out now!
BlackNapkin123 profile picture
@BlackNapkin123 my order filled at 15.58 , a little bonus I hope😁. Oh well I’m guilty again of FOMO …
Microcap Growth Investor profile picture
In the short term (next few weeks/months), I could see Ford's stock possibly bouncing, but I don't think $16-ish are the lows yet. Lots of headwinds for OEM's. (1) Used car prices are rolling over. This is bad for Ford Motor Credit profits - which have peaked for this cycle. Also, vehicles being traded in have had a lot of equity in them, allowing Ford to get top dollar on selling a new vehicle, those days look like are coming to an end (to me). Profitability will suffer as some discounting returns. (2) Fed raising interest rates makes buying a car more expensive on credit and (3) gas prices at these levels will also put some pressure on some of Ford's gas guzzlers. (4) Consumers have bought lots of "things" during covid, shunning experiences/services. Evidence shows that they will allocate more toward travel/cruises/experiences in the near term (next 6 to 12 months). Longer term I think Ford will be a HUGE winner, but I think its prudent to wait to buy back in. JMHO, I could be wrong.
Microcap Growth Investor profile picture
@Microcap Growth Investor And (5) Aluminum prices have more than doubled since April 2021. Input prices are up a lot across the board. Add it all up, I think its a tough environment for Ford right now. We shall see.
@Microcap Growth Investor

I agree. To add to what you are saying. Ford is at the optimal part of the market cycle where they have so many fresh products. Demand is great for Ford but they can't get the dang products out of the factories. In the meantime, I fear the competition is going to have more reveals then Ford over the next year or two and the market excitement for Ford will migrate to other auto companies for awhile.

Like you I still really like Ford through 2025. But it's hard to see what drives the stock in the near term. Especially seeing how the market reacted after the 4th quarter earnings. I feel pretty confident that what drove the "disappointing" earnings, aside from supply chain constraints, is that Ford is making the investments they say they are going to make in technology to transform the company. A lot of that is not capex. They are expenses that go straight to the the bottom line. Personally I see that as a good thing. CFO Lawler says repeatedly that Ford plans to get to their margin goals even with all the huge investments they plan to make in EVs and tech. As of the 4th quarter Lawler says Ford is still on track. But the market doesn't like it. It seems investors just want to see maximum profit now from Ford. Any reward Ford gets for the investments they are making in the future is only going to be attained when it is proven in the products they bring to market. I fear the market may not be impressed until around 2025 when Ford brings to market its next generation tech stack.

I'm actually confident Ford can continue the strong pricing both in new vehicles and in auction values for older cars, but it's hard to see how it can get any better. I'm not too worried about the Fed either. But those are about the only things I'm confident about, other than that Ford will continue to execute on their long term goals.
Microcap Growth Investor profile picture
@Stewart Foreman None of the individual items I pointed out are a deal killer for me w/r/t Ford. But, i think all of them taken together, will weigh on Ford stock (sentiment) for awhile. I think its likely this isn't the final lows in the stock. Having said that, I don't think the stock goes straight down from here, we could see a bounce as it seems oversold.... It could take awhile to see those lows I think we will eventually get. So I will be patient before buying back in.
March EV sales BOOMING in Europe but with inflation running Spain 10% Germany 8% Lithuania 14% passenger car registrations Italy (-22.6%) France (-13.0%), and F sales down -25.6% YOY (-34% highly profitable truck sales) add supply chain issues F might get cheaper before it climbs back up
Bikerron1 profile picture
Another way to play the automakers is with AXL at 7.60 or lower. Will be looking at F and GM today for a trade.
Over the past week I've grown a little more negative on Ford stock. Not because of Ford or demand for Ford vehicles. But just the whole global supply chain issues being a problem for a long time to come, particularly with the new news in Ukraine.

There was a fleeting moment just over a week ago that maybe Ukraine war would get peacefully resolved. Now, it's looking more clear then ever Russia is just going to keep bombing that country for months to come even if they can't occupy it.

I can't say exactly what specifically all the supply chain fall out will be. Some of it could be even be a positive. It could force more energy infrastructure spending in North America which can push demand for Ford trucks. But the net affect I think is negative and long lasting.
The Asian Investor profile picture
@Stewart Foreman I understand your concerns. What I am trying to do, however, is not get influenced week by week by new developments. I try to focus long term, and with that in mind, I believe shares of Ford are very attractive here.
@The Asian Investor

Yeah, to be clear I still very much like Ford looking out to the further horizon of 2025-26. I'm confident Ford is going to execute on their long term plans through these times.

I would just warn Ford investors they probably need to be patient for awhile if they are going to own it. I'll be pleasantly surprised if Ford doesn't walk back the guidance they gave in the first quarter.
Risk Advisor profile picture
@Stewart Foreman

According to an interview recently with Pat Gelsinger, CEO of Intel, automotive comprises only 4% of the total sales of chips in the USA. Apple is the largest purchaser of chips in the world, and sales to high tech, video game makers, telecommunications, and others produce the most profits as automotive is considered by some chip analysts as cheap chips.

That said Intel did announce the construction of a $20 Billion chip plant to be located outside Columbus, Ohio, the most expensive plant project in the history of the State, while hinting over time it could be expanded to roughly $100 billion.

That said he refused to disclose how much if any would be dedicated to automotive, except to say that autonomous driving vehicles will utilize substantially more chips than ICE and BEV vehicles.

Not sure if Ford expects to contract with Intel, if at all.
F150E production is supposedly scheduled for this spring. Any available data on production estimates for April or May ? Looking for to a slight bump on the share price once the " Lighting Strikes ".
The Asian Investor profile picture
@C13678 I don't have any specifics, but maybe someone else does...
At this point it's an open question whether Europe will have any electricity soon! For sure they are going to (are) take a major hit in terms of their economies and spending power of their citizens.
RickJensen profile picture
Risk Advisor profile picture


Are you familiar with Josh Haliburton at Ford? If not you may want to access internet investigate what he now doing there and inform us as to how it will affect Ford long term.
RickJensen profile picture
@Risk Advisor I am aware of him and I expect it to get better, but QA people always have flaw. They don't consider what they can't know.

I worked as a QA specialist early in my career.
The best advice I got was from a NASA specialist.
He said you test for just 3 failure modes.
1. The likely
2. The unlikely
3. The impossible

I couldn't stop all the issues. You just try to minimize them.
Risk Advisor profile picture

There is a two page article on him in today's Detroit Free Press. His intended approach is interesting, having to do with "taking people in the product development process "out of their silos" and forcing them to work with other people in the chain of designing, engineering, purchasing and manufacturing stressing constant cross communication admitting all problems and working as a team.

Hope this improves the quality of the products, but he admits it will take some time.

Mr. Farley is allegedly "more than just frustrated by the rising warranty costs" and brought in an outsider to implement a systematic process solution to all the problems. Mr. Halliburton allegedly has outstanding credentials.
PT Larry profile picture
Thanks for the positive article.
The Asian Investor profile picture
@PT Larry Thank you, it was much needed :)
PT Larry profile picture
@The Asian Investor Yes, am afraid the chip shortage can continue to adversity effect the share price.
The Asian Investor profile picture
@PT Larry It is only a temporary problem that doesn't affect Ford's long term free cash flow potential.
I am afraid that the correction is not over yet. Will wait until summer or any sign / indication that F starts to pick up (F has a hard time to stabilize at $17.50) or less volatile ...
The Asian Investor profile picture
@IreneKat You may miss out on the upside then...
Ford's all time highs were at the end of the 90's.
Is Ford doing anything regarding charging stations?
Long F but I can not recommend adding at this time. Went from 1st to 3rd in US sales from Q4 to Q1. Anyone expecting strong earnings from Ford China or Europe this quarter? Not exactly a positive trend.
The Asian Investor profile picture
@PEAK AUTOS Strong reservations and new product launches will shine a positive light on Ford.
Didn’t they just report a 25.6% decline in US sales today?
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