Ford: A Highly Undervalued Stock Worth $17
Ford (F) is holding its place as the No. 2 automaker in the U.S., behind only General Motors (GM). The automaker just announced a joint venture with Dow Automotive Systems, a subsidiary of Dow Chemical (DOW), to develop methods of using carbon fiber in mass produced vehicles cost-effectively, with a goal of reducing average vehicle weight by 250-750 pounds. This could help Ford meet the 2016 and 2025 CAFE targets for improved fuel economy, and I believe that it will also help boost sales in the U.S. based on cost of ownership considerations for both gasoline-driven and hybrid/all-electric vehicle power trains, pushing up the stock price.
Ford is cementing its overseas efforts to build market share in the BRIC countries with mixed success. The Ford Focus was named Russia’s 2012 Car of the Year for its class, but in order to be impressive Ford needs to win over the China market. So far Ford is coming up short, with sales falling 16% in the first quarter of 2012 compared to the first quarter of 2011. While this news did not have any immediate impact on the stock price, I am somewhat concerned about this because demand in China, the biggest global market by volume and potential, remains strong. With consumers in the U.S. market holding on to cars longer, Ford will have to take steps to win over Chinese auto buyers to continue increasing revenue and support expectations for increased growth. To continue reading, click here.