It has been quite a while since I have posted about Ford (F), one of
the better plays I have had in the entire bull run-up since early '09
(and trust me, I have had my fair share of losers).
Ford made a spectacular run from around a buck a share in '08-09 to
just under $19 in early 2011, helped by strong leadership, favorable PR
as the car company which was not bailed out, some generally favorable
product line reviews, and Toyota's huge problems (not to mention the
usually overlooked favorable government treatment and support). Ford
passed Toyota in 2010 to reclaim the #2 automaker sales spot in the U.S.
and posted a 15% increase in overall line sales.
Jim Cramer has been an unusually vocal supporter of the Ford case and
recently had CEO Alan Mullaly on the air to address concerns over
highly-publicized and supposedly misinterpreted comments "that Ford had
seen its best results of the year in the first quarter".
Mr. Mullaly acknowledged that global growth might be sluggish for the
rest of the year, but that the company was progressing well within its
five -year plan and "believes Ford is well positioned given its strong
product line, increased productivity, and penetration of emerging
Cramer agreed, saying investors shouldn't be swayed by short-term weakness, when Ford's long-term view is so "compelling."
Ford shares have not done well this year after it posted a
disappointing 4th qtr. 2010 earnings report, trading off the January
$18.97 highs to today's $13 level, a hefty 30% decline.
To add to the situation, the J.D. Power Initial Quality Study just
came out, with Ford falling from last year's 5th place all the way to
23rd, which is fairly shocking given the positive product reviews.
Lexus' top-selling LS sedan had the fewest problems reported by new
car purchasers in the past year. Honda, Acura, Mercedes-Benz and Mazda
were next. Ford's lower ratings were mainly based on problems with the
in-dash, touch-screen monitors found on many of its Ford and Lincoln
models. This strikes me as somewhat positive in that issues were not
largely related to more fundamental manufacturing quality points.
I know several traders who are extremely bullish on the stock as a
long-term play, arguing that Ford is especially well-positioned outside
of the U.S. and citing its strong leadership team. I know others who are
somewhat bearish, fearful of Toyota's inevitable comeback. I am neutral
at this point, but not especially anxious to jump into a position with
all the other market issues surrounding the global growth outlook at