) just posted its first annual profit in four years, and the
company has projected that 2010 will be another year in the black.
And I couldn't agree more. Ford is set for a big year, and I
encourage everyone to jump in before the surge.
Here are my top five reasons why investors should buy Ford stock
Reason #1 - A Habit of Topping Expectations
In the second quarter of 2009, Ford's loss for the period was
less than half of the shortfall expected by Wall Street. Then, in
third quarter, Ford's earnings were 316.7% better than analysts'
consensus estimates as it swung to a surprise profit. For the full
fiscal year of 2009, Ford posted net income of 86 cents per share.
That's infinitely better than the 31 cent per share loss that Wall
Street expected. When a company continually blows away expectations
like that, it's a very impressive sign.
Reason #2 - Great Product Line
Unlike bankrupt competitors Chrysler and General Motors, Ford
has a much more balanced product line and does not sell small
vehicles at a loss like other automakers. Its European-styled Focus
made a big splash at the Detroit auto show, and the company's
Fusion Hybrid and its versatile Transit Connect van snagged the top
car and truck of the year awards. Throw those on top of the already
successful redesigned Ford Mustang and the F-Series pickup, and you
have a great showroom lineup.
Reason #3 - Surging Market Share
Ford really showed its stuff in December, with sales up 32.8% on
the month over last year. As the only Detroit automaker to avoid
bankruptcy, the company appeared to be eating into the market share
of its competitors as consumers lost confidence in the General
Motors and Chrysler brands. GM's December sales fell 5.7%, and
Chrysler's dropped 3.7%. This trend has played out for months and
should continue well into 2010. One of my clients is a major car
dealer with multiple brands in two states, and he recently informed
me that he expects Chrysler to go out of business -- and believes
that even GM may not survive despite massive government support. If
and when that happens, that means even bigger market share for Ford
Reason #4 - Improving Economic Trends
Ford is expecting U.S. industry sales of 11.5-12.5 million
vehicles in 2010, up from 10.4 million last year. This is in large
part due to improving economic conditions and growing consumer
confidence. While some investors may see this as wishful thinking,
I am confident signs are pointing towards recovery.
The Wall Street Journal
recently did a survey of 56 economists who on average expect 1.4
million new jobs will be created in 2010. There's a lot of pent up
demand for new cars, and as the labor market stabilizes I expect
Ford to do brisk business.
Reason #5 - A True Global Player
Ford gets more than half of its sales outside North America and
is very popular in Europe, especially with its Fiesta sub-compact
car. The company is making a big push into China right now that
will be very profitable in 2010. For instance, the new Ford Focus
is designed to appeal to consumers in all countries but
specifically targets the emerging market of China. The fact that
Ford isn't tweaking individual models in various regions of the
world will not only save on costs but will also help them build a
real global brand to take the company to the next level.