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Ford Motor: Automakers' Strike Deadline Creates A Long-Term Entry Point

Sep. 08, 2023 2:33 AM ETFord Motor Company (F)63 Comments


  • Ford Motor stock prices have been negatively impacted by a series of setbacks since July, nosediving from $15+ to the current level around $11. This creates a good entry point for long-term investors.
  • Its issues (like the ongoing disputes with United Auto Workers, high-interest rates, and components shortage) are only temporary in my view.
  • Looking beyond these near-term issues, F maintains a robust profit margin, owns some of the most iconic brand names and can invest sustainably for long-term growth.
  • In the meantime, extreme market sentiment has compressed its valuation to a dirty cheap level.
  • Looking for a portfolio of ideas like this one? Members of Envision Early Retirement get exclusive access to our subscriber-only portfolios. Learn More »

Unionized Employees Of Publisher HarperCollins Go On Strike

Spencer Platt/Getty Images News

Ford Motor stock's rebound potential

The stock price of Ford Motor (NYSE:F) has been under tremendous pressure lately. As seen in the top panel of the chart below, F's stock price peaked above $15 in July and has

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This article was written by

Envision Research profile picture

Envision Research, aka Lucas Ma, has over 15+ years of investment experience and holds a Masters with in Quantitative Investment and a PhD in Mechanical Engineering with a focus on renewable energy, both from Stanford University. He also has 30+ years of hands-on experience in high-tech R&D and consulting, housing sector, credit sector, and actual portfolio management.

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of F either through stock ownership, options, or other derivatives. 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.

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Comments (63)

Thank you for an interesting and thought provoking article.
I sold my Ford shares earlier this year. I've been sitting on the sidelines and waiting for a possible entry point. It is looking like the UAW will have targeted strikes which will shut down most auto production in the US.
In the last 3 months there have been zero insider open market buys. I find this worrisome. When the people that are running things aren't buying, you have to rethink this bargain price that Ford is selling for.
I like Fords. I have an Edge, an Escape and an F-150 in my household.
My girlfriend wanted a Maverick. After waiting for over one year, I bought the Edge instead.
My frustration with obtaining a new Maverick is part of a larger problem at Ford.
Dealers are seeing many orders being cancelled due to the steep price increases.
The $70,000 price tag has turned off many potential electric truck buyers.
At the same time Ford still can't meet the demand for the Maverick.
I expect other manufacturers will fill this gap in production and attract buyers to a lower price electric pickup truck.
As I have been writing this comment the UAW has announced targeted strikes beginning at midnight.
A quick internet search reports that Ford's labor costs are $69 per hour. The UAW's demand for an immediate 40% increase would bring the pay up from an average of $60,000 to $84,000 annually. This will push the labor costs over $90 per hour.
I don't think that the US auto market can absorb that jolt. This will most likely result in much lower auto sales.
For the next few weeks it may be prudent to sit on the sidelines. I'd be more open to buying STLA than F. That may change if STLA has a long strike to deal with.
STLA's international production gives it more options to supply dealers and they are fat with cash to ride out a longer strike.
Risk Advisor profile picture

Abandon automotive entirely. Way too many competitors with more coming from countries like Viet-Nam (yes they have already purchased land to build a plant in North Carolina) and China. Familiar with BYD?

Consider another industry. Recommend VZ. Much stronger balance sheet than any of the Big three, pays a better dividend, which was just increased this month, has only two real competitors T and T-Mobile, no foreign competition to speak of as these three control 98% of the US market.

Examine VZ"s balance sheet, income statement, and gross margins against any auto company,

Not even close.

Best luck investing.
RickJensen profile picture
Why you want to buy a F SUV.
pftthree profile picture
@RickJensen Ford saw gains today. What do you think about the stock going forward?
RickJensen profile picture
It's going to be a hard pull until next year, but I look for a good Q1.
Take the divi....
pftthree profile picture
they say that UAW is not going to strike across the board now
dmce profile picture
@Envision Research - Here's one Ford stat that you overlooked:

Ford's 5 year (2017-2022) revenue compound annual growth rate was +.1%. Here's some comparison data for that same statistic:

Tesla 47.3%
VW Group 2.4%
Toyota 1.7%
GM 1.5%
Ford .1%

A company that hasn't been able to grow its revenues in 5 years is not a great investment.
ronald61239 profile picture
@dmce ----Nothing like comparing a Co.'s percentage growth with a low revenue number base to mature Co.'s with large revenues base.
The old story, making numbers lie.
Risk Advisor profile picture

Ford has acknowledged that subscriptions/digital, and software services particularly with Pro with its "50%" margins may change all that.
@ronald61239 he is correct about one thing. Wall Street worships revenue growth…..
I think Ford, and the others, are well positioned to weather a strike. They have excess inventory at their dealerships, about twice the normal. So a two month strike would allow inventory to go back to normal levels. A longer strike could hurt but saving labor costs for up to two months would be a bonus.

These three companies have been aware that a strike is a real possibility at this time, literally for years. It makes sense to build up inventory in advance.
Risk Advisor profile picture

OK, but you may want to review what the UAW strike in 2019 against GM in 2019 cost the Company in profits and losses.

DETROIT – The United Auto Workers’ 40-day strike against General Motors will cost the company about $3.8 billion to $4 billion for the year and $1 billion for the third quarter, the automaker said Tuesday, much higher than some Wall Street analysts had estimated.

The final figure was allegedly $3.6 Billion.
@Risk Advisor Thanks for the info, but was that direct losses, or lost potential profits? Does it include the difference in wages for the remainder of the year?
Risk Advisor profile picture

Unsure, but you can find it on internet.
Sorry for the completely unrelated post, but I couldn’t resist it after hearing all the chatter about how subscription services are going drive auto profits to the moon……

Car makers are generally desperate about two main things these days - hopping on the EV train, and trying to somehow make subscriptions a thing (with their eyes on all the money that companies in completely unrelated fields are making from that model).

BMW has been at the forefront of both, and everyone remembers it starting to charge customers for heated seats last year, right? Well, that's gone now. The 'feature' only survived one winter, and barely. BMW, to its own shock, found that people don't want to pay for that sort of stuff, and so it's taken the heated seats subscription off of its online stores.
It's interesting that Ford's share price has been underperforming around the $10 - $12 range for many years... what's interesting is that most who write about Ford say the same thing - its underperforming... $10 - $12 is it's patterned range with a few spikes every now and then
50locations profile picture
Your article is a little late in my book. Just looked at F this morning now at 12.31. I added F years ago at 9.38. Been on DRIP since and selling covered calls. I agree F is a great buy looking forward.
ronald61239 profile picture
EARNINGS & DIVIDENDS people !!! Check out the share price move today. Someone must see the softening of the tone of discussion with the Union.
Third Qt. earning will be excellent.
pftthree profile picture
@ronald61239 something happened
@ronald61239 ford put a new offer on the table. Hopefully there is some progress.
ronald61239 profile picture
@J2568 ---Hi "J" Is your lot being filled with new auto's, incase of a strike ? Are the dealers getting incentives, to hold a large inventory?
Can you tell us what is happening, at the dealerships !!

I'm reading used auto prices are going up because of lack of supply.
The labor negotiation really don't matter as a place to enter a position on F. In the depth of a recession w high pe would bet it but the risk of bkrpt would be present. It's not time to buy, if they have a future for equity holders. Bond holders can also have concern in bkrt
a couple of points~~~~there may be a settlement without a strike, in which case your point #1 re increased costs will apply.
I don't believe a strike target has not been announced yet for the U.S. Unifor has selected Ford in Canada. If a strike happens then perhaps the target will be GM or Stellantis, not Ford. Presuming there will be an eventual settlement will mean point #1 will still apply.
Risk Advisor profile picture

According to the UAW senior leadership there may be no target since there is discussion that the UAW may strike all of the Big three at one time.

Unlikely in my opinion but the leadership is obsessed with the contract the Teamsters received who are drivers for UPS.

USA Today reported the following:

Full-time UPS drivers will earn an average of $170,000 in annual pay and benefits at the end of a five-year contract agreement, UPS CEO Carol Tomé said during an earnings call Tuesday.

The salary ranges for full-time and part-time drivers were among the details to come out this week as the Teamsters union begins the process of ratifying the tentative agreement that emerged last month as a strike appeared imminent.

"When you look at total compensation, by the end of the new contract, the average UPS full-time driver will make about $170,000 annually in pay and benefits," Tomé said. "And for all part-time union employees that are already working at UPS, by the end of this contract, they will be making at least $25.75 per hour while receiving full health care and pension benefits."

Working conditions for workers are expected to improve as UPS and Teamsters reached an agreement on air conditioning measures, "including air conditioning and every new U.S. package car starting in January 2024."

Workers will also get Martin Luther King Jr. Day as a paid holiday for the first time in company history thanks to the new tentative contract.

The contract was voted for and ratified by the Union on August 1st.

Am unsure of all the details in the final approved version.
RickJensen profile picture
@Risk Advisor
I'd love to see a UAW member deliver packages to us in Florida all day long.
cetarro profile picture
@Risk Advisor so is 170k the new min wage? Lol
RickJensen profile picture
I agree 100%. Follow it down or pick some up now and some later. Better to be on the boat that left at the dock.
(It's going to get worse before it gets better, like, in months, not weeks, the market is a hot steaming mess)
Risk Advisor profile picture


The best news which was published in the Detroit newspapers this morning is that a group of banks have agreed to provide Ford with a $4.0 Billion working capital credit facility for drawdowns to be utilized if needed during a potential upcoming strike period if and when a strike does materialize.

Very prudent on the part of Mr. Lawler. Lots of dark clouds now that GM has agreed to provide the UAW with a 16% pay increase (details unknown) following Ford's proposed 9% increase.
RickJensen profile picture
@Risk Advisor
Always appreciate your input. Thx.
When Ford's dividends were the Ford family's quarterly allowance maybe $10 would have been a good entry point but what do you count on now? Valuation? Cash from Operations? Dividend safety F, Dividend history F. I am a potential buyer under $10 but would not be a confident one.
The question is what is the catalyst to drive the shares higher. We just went through arguably the best three years the industry has ever seen and the shares have not moved appreciably.
"and to irritate'...reiterate? lol. Ignoring biggest issue, continuing recalls and poor quality
I am Camaro guy but a Ford company believer. I expect all big 3 to keep going lower and lower if the street does not see the new deal as positive. When Ford gets below $11 to $10 and change, I will buy. Ford appears to be best positioned legacy car company for the future which is surprised based on their slow-moving tradition.
Risk Advisor profile picture

The Chevrolet Camaro as we know it is dead. The company just announced that the sixth-generation of the long-running pony car will be discontinued at the end of the 2024 model year. And, it's likely, it'll be dead permanently in a form we're familiar with—a gas-powered two-door coupe or convertible. But, as has been rumored and which was obliquely referenced in Chevy's release, the Camaro nameplate will survive—in what form remains to be seen, but you can probably guess, and it rhymes with "TV."
@Risk Advisor thank you, but I been a fan and owner of the Camaro for 30 years. So just fyi there is Gen 7 Camaro mid engine. It was never supposed to come out at the end of gen 6. They want to double the base price but first to develop the Vet to achieve super car status. They announced the end of the Camaro not because they don’t have a gen 7 prototype but it easier to concentrate on the vet till it hits supercar status. They have moved all the best from the Camaro to the vet.
If they don’t achieve supercar status with the vet then you can look for an EV Camaro.
Most likely the suv Camaro will come out first as ICE
pftthree profile picture
the price is not $11. But if it was, I would buy more.
Robert Shriver Barnes profile picture
The problem is margins, together with GM and Nissan they have the worst in the industry. It seems that warranty costs are a real killer for them.
@Robert Shriver Barnes I agree 100%. Until Ford proves it can get its quality and recall issues under control I rate Ford a hold at best. I cringed 2 weeks ago when Ford announced a $300k Mustang for the racetrack. I think Mr.Farley is needs to refocus his priorities.
psgros profile picture
I lean towards your thoughts.
Add a retired investor I am thinking to use the strike at a time to add nibbling at F all through it as (if) it goes down.

So you say it should gain well in the long term.
Could you define long term for you?
Again being retired that makes a difference to me
Risk Advisor profile picture

If retired stay away from automotive entirely. There are much better options which pay better dividends and have much stronger balance sheets than Ford or GM. Start with VZ. The top three companies VZ, T, and T-Mobile control 98% of the US market. NO real foreign competition unlike automotive. Dividend yield is 7.5% and was raised yesterday.

You may also want to investigate bond funds or BDCs. Long term retirement income should be your top priority.
Robert Shriver Barnes profile picture
@Risk Advisor disagree on BDCs, they are not buy and hold type securities. I'd go for MLPs like EPD or ET instead.
@Risk Advisor I think that many people focus too much on stocks. There are always stocks that are interesting but at the moment, I feel that the yields on investment grade corporate bonds are very attractive. Retired investors looking for long-term income might consider individual investment grade corporate bonds, rather than stocks. No need to worry if the market value goes up or down: just hold to maturity for the income.
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