Ford: This $10 Stock Could Double In 12 Months

| About: Ford Motor (F)

Ford (NYSE:F) has certainly seen its better days. But there could be reason to be optimistic about the future of the embattled automaker. The latest news from the Detroit car company - currently trading at around $10 - is that it plans to offer pension buyouts for many of its employees as a means of shedding some of its debt. Due to this latest news, other financial steps it has taken, the general outlook for the U.S. auto industry as well as its relatively cheap price, it might be the right time to buy Ford again.

As it currently stands, Ford has close to $50 billion tied to pensions, a fact that has dragged down the company's credit rating, and most likely its stock price. The plan to offer pension buyouts to 98,000 employees could cut that $50 billion by a third. The buyouts would be voluntary, so no one is quite sure how many employees will opt to participate in the program. Ford's chief rival, General Motors (NYSE:GM) has enacted similar programs to deal with its debt, most recently revising its current plan. The buyouts would be distributed in lump sums. Howard Freers, chairman for a Ford retirees group, underscored the magnitude of the offer.

"This is a major decision for every employee who receives that offer," Freers said. "Do I take the lump sum or stay where I am? That's totally, totally dependent on what that offer is, how long they project you will live and whether or not you're in good health."

So clearly, it isn't a foregone conclusion that employees will opt in to the program. But regardless, it seems like a good step to take to start taking on its debt and perhaps begin to give investors confidence in the company again.

What could be of help to Ford as it attempts to get back in the black is the fact that, unlike GM, it did not take bailout money from the federal government. This has been shown to have been extremely beneficial for Ford's image. According to a survey, 63 percent of consumers had a positive view of Ford after the bailout, a jump of 22 percentage points from before the bailout. Image is extremely important, especially with buying cars, as people often base their decisions around things like image and reputation more than actual performance. Also striking from the survey: 33 percent said they were more likely to buy a Ford because the company chose not to take the bailout money. Regardless of what one thinks about the politics of it all, it is undeniable that results like these are great for Ford's image. Over the long-term, I would expect people's positive views of Ford to continue.

Another reason to be excited about Ford is the comeback of the American auto industry in general. The month of May was a great one for car companies (though not just American ones, as Toyota (NYSE:TM) and Honda (NYSE:HMC) were also quite successful). Chrysler and Volkswagen also did very well with their U.S. sales. As for Ford, the company saw sales rise 13 percent. Notably, the F-series saw a 29 percent hike. Even the Fusion grew 9 percent. As a whole, U.S. auto sales are up 30 percent from the same month just one year ago. All of these numbers suggest good reasons to be excited about the future prospects of car companies in a time when consumer confidence isn't very high. One would normally not expect to see high levels of auto sales in a tough economy like this, but since this is what seems to be happening, I am very encouraged about the outlook of the auto industry as a whole, of which Ford makes up a significant part, especially in America. And Ford being seen as a distinctly American company is also a strong point, a point which gets back to the aforementioned discussion of the company's image.

Also not to be overlooked is the recent news of Moody's upgrading Ford's credit rating. The highly-respected firm had this to say about the future prospects of Ford:

"The upgrade of Ford recognizes the strength of the company's position in North America, its robust liquidity position, and our expectation that the company will continue to embrace sound operating and financial disciplines. We believe that these strengths will enable Ford to maintain an investment grade profile in the face of the sector's ongoing cyclicality and weakness in the European market."

Hearing words like these from Moody's is a great sign. One analyst even argues - based on the credit rating upgrade as well as other financial factors - Ford's stock could double by 2014. That's a pretty optimistic view in my opinion, but I do agree that things are looking up for Ford, and I would certainly invest in it at its low current price.

Finally, and this is admittedly less important, but still worth mentioning, Ford has decided to expand its advertising on Facebook (NASDAQ:FB). This is quite interesting, as GM recently made news when it decided to drop advertising on Facebook. Ford decision could pay off, as it doesn't have GM to compete with in terms of Facebook ads. If you're bullish on the idea of Facebook advertising, this is good news.

To be sure, Ford is far from its heyday. However, I think I have shown there is good reason to be optimistic about the future of the automaker. If the pension buyout works as well as it could, investors could gain confidence and the stock could shoot up toward $20 within 12 months. Thanks to this, as well as a positive image among consumers and the general outlook for the American auto industry, I would jump on Ford right away, especially at $10 per share.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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