Is Ford Undervalued Today?

The so-called Trump bump has taken many already-overvalued stocks and sent them higher. Are there any good deals left in the stock market? One stock that caught our attention is the auto maker Ford. Is Ford undervalued today? The Motley Fool refers to Ford as the forgotten auto maker in an article about 4 stocks to buy that are trading near 52 week lows.

Automakers not named Tesla are having a hard time getting any love in today’s stock market. Ford has made vast improvements in the quality and attractiveness of its vehicles since the recession subsided, and now it is churning profits quarter after quarter. And no one seems to care.

The argument for buying Ford is that while it is selling and making money from SUV’s and trucks it is investing in autonomous driving and electric vehicles which are seen as the future of automobiles.

Ford in Perspective

Ford is the one of the Big Three auto makers what did not go bankrupt like GM or get bought out like Chrysler. Ford Motor Company, F, sells in the $12 a share range. In the last year it has traded below $12 and up to $14. In the last 5 years its high has been up to $17.50 a share and its low has been $9.21. If we go back 10 years we get a high of $18.27 and a low of $1.43 a share at the depths of the Great Recession in late 2008 and early 2009. In the last 40 years the stock traded at $37 a share in 1998 and around $1.90 in the late 1970’s and early 1980 taking 4 subsequent stock splits into account. Ford pays a 4.77% dividend at the current stock price.
And how is Ford doing today? According to M Live Ford’s 2016 earnings are the 2nd-best in history as Ford sent its employees profit sharing checks averaging $9,000 per employee. So, the company is making money and apparently working on the things that will sell cars tomorrow, automatic driving and electric cars.

The Electric Ford

According to Forbes Ford’s push into electric vehicles is coming at the right time. Along with announcing that it will not expand its Mexican facilities Ford says it will expand electric vehicle production.

A significant item in this announcement was that the company would be expanding its electric vehicle production. The U.S. based auto maker announced that it would now be producing a hybrid version of the F-150 truck and sports car Mustang, a plug-in hybrid version of the Transit Custom commercial van and two new hybrid police vehicles. This is significant news as electric vehicles are closer than ever to being commercially viable. With the launch of the new 238 mile range Chevrolet Bolt and the impending launch of Tesla’s Model 3 in 2017, EVs could finally cross over from being a fringe figure on the horizon to a mass market product.

An interesting suggestion from one analyst is that Ford should simply buy Tesla. In this regard Investor’s Business Daily suggests that Tesla will get run over by China, GM, Ford and BMW as these come up to speed and mass produce high quality electric vehicles. Along the way Ford will keep making money and staying up with new trends.

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