I recently bought shares of Ford (F) in the Aspect Large Cap Value portfolio on Covestor, and while I am not looking for massive gains, I think that the stock could rally a bit in the coming year.
That combined with the recently raised dividend of 50 cents per share per year makes for an attractive investment. The dividend, which will be over 3% based on my purchase price, was the thing that lured me back into the stock.
Fundamentally, I think that Ford is on very solid footing, having jumped to the head of the class in terms of producing a quality product. I believe this is in no small part due to not taking a government bailout during the worst of the financial crisis, which gave the company the leeway to design and produce cars that people actually want.
The big picture is that the average car on the road was around 11 years old as of this summer, a record high. Although cars are lasting a lot longer these days, the American automotive fleet is in desperate need of a refresh.
Personally, I like a lot of what Ford is doing – making their cars more fun to drive and fuel efficient at the same time. There will be a lot of new product out in the next few years, and that as much as anything is costing Ford money. Still, I prefer to invest in companies that put out excellent products and underinvestment in the auto industry is a quick way to make your products look old and undesirable.
Although market results can never be assured, I see Ford shares trading higher. I feel that as the economy begins to recover, customers will return to Ford dealerships in surprising numbers. When they do, I look for Ford to match or beat expectations.
In summary, I personally believe that Ford presents a way to invest in a potential economic recovery, especially now that we know CEO Alan Mulally plans to stay with the company through 2014. Finally, if you own 100 Ford shares for six months, the company offers discounted pricing on vehicles under its “friends and neighbors” program.
Photo Credit: HoskingIndustries
DISCLAIMER: The information in this material is not intended to be personalized financial advice and should not be solely relied on for making financial decisions. The investments discussed are held in client accounts as of December 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable. Past performance is no guarantee of future results.