As you know, the only American automaker to not file for chapter 11 was Ford. Ford, back when GM and Chrysler were asking for and getting a government bailout, only asked for loan guarantees. They didn't get them, and as it turns out, they didn't need them.
Ford, like most companies, cut expenses. In the third quarter, Ford cut its spending by $1 billion. That was a move taken to ensure its survival.
However, Ford also did something else that will position it to do well in the future. It grew the average amount of revenue per car sold. The $2,700 boost in revenue per car helped produce an increase in revenue of $1.9 billion. That is nearly double the amount of money saved by cost cuts.
Things only look better for Ford. On October 27, the long term critic of American nameplates, Consumer Reports, called Ford's vehicle quality "world class." We wonder what took Consumer Reports so long, since there has been no statistically significant difference between the quality of American nameplates and foreign ones for about a decade.
And Ford is taking advantage of its competitor's weakness to grow. It's added 2.2 percentage points to its market share, boosting it to 14.6 percent. The company also cut its incentives and increased prices, which increased revenue in North America by $1.4 billion. Ford has posted net income of $1.8 billion, although its pretax operating loss so far is $1.3 billion. The CEO of the company, Alan Mulally, says that Ford will be "solidly profitable" in 2011.
That doesn't mean there aren't challenges for Ford. First up is the debt it's carrying. Ford, because it didn't go through the bankruptcy process like GM and Chrysler, didn't get a chance to shed debt. It now owes bondholders $38.1 billion, versus the $22.3 billion GM owes. And the United Auto Workers rejected a contract that would have allowed Ford to save $500 million annually in worker compensation.
Ford is addressing those concerns, though. Mulally plans to meet with UAW leaders to see if he can get some concessions from the union. And Ford is selling Volvo and will use the proceeds from the sale to pay down some of its debt.
So from a fundamental standpoint, Ford's stock looks good. Looking at things from a technical standpoint also gives investors a reason to take the stock out for a spin.
An analysis from technicians at Barron's found that the stock "is starting to look as if a long term recovery is underway."
The technicians say that Ford is now forming a base somewhere between $8.95 and $9.60. A move above this point, they say, would result in a multi-year high in both price and relative performance, something that they term "a winning combination for long term investors."
Investors can purchase Ford's stock at a fraction of what it traded for a decade ago, when it was completely dependent on large SUVs for profits and was carrying way too much capacity. That forced Ford to spend large sums on incentives to move vehicles. Now, it sells fewer cars but makes more money on each one.
In addition to the long term gains that are likely in this stock, investors can also profit by selling covered calls against their holdings.
It's rare when investors get a chance to purchase a stock that looks so good from both a fundamental and technical perspective. Ford right now is giving investors a chance to do just that.
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Ford, like most companies, cut expenses. In the third quarter, Ford cut its spending by $1 billion. That was a move taken to ensure its survival.
However, Ford also did something else that will position it to do well in the future. It grew the average amount of revenue per car sold. The $2,700 boost in revenue per car helped produce an increase in revenue of $1.9 billion. That is nearly double the amount of money saved by cost cuts.
Things only look better for Ford. On October 27, the long term critic of American nameplates, Consumer Reports, called Ford's vehicle quality "world class." We wonder what took Consumer Reports so long, since there has been no statistically significant difference between the quality of American nameplates and foreign ones for about a decade.
Image via Wikipedia
And Ford is taking advantage of its competitor's weakness to grow. It's added 2.2 percentage points to its market share, boosting it to 14.6 percent. The company also cut its incentives and increased prices, which increased revenue in North America by $1.4 billion. Ford has posted net income of $1.8 billion, although its pretax operating loss so far is $1.3 billion. The CEO of the company, Alan Mulally, says that Ford will be "solidly profitable" in 2011.
That doesn't mean there aren't challenges for Ford. First up is the debt it's carrying. Ford, because it didn't go through the bankruptcy process like GM and Chrysler, didn't get a chance to shed debt. It now owes bondholders $38.1 billion, versus the $22.3 billion GM owes. And the United Auto Workers rejected a contract that would have allowed Ford to save $500 million annually in worker compensation.
Ford is addressing those concerns, though. Mulally plans to meet with UAW leaders to see if he can get some concessions from the union. And Ford is selling Volvo and will use the proceeds from the sale to pay down some of its debt.
So from a fundamental standpoint, Ford's stock looks good. Looking at things from a technical standpoint also gives investors a reason to take the stock out for a spin.
An analysis from technicians at Barron's found that the stock "is starting to look as if a long term recovery is underway."
The technicians say that Ford is now forming a base somewhere between $8.95 and $9.60. A move above this point, they say, would result in a multi-year high in both price and relative performance, something that they term "a winning combination for long term investors."
Investors can purchase Ford's stock at a fraction of what it traded for a decade ago, when it was completely dependent on large SUVs for profits and was carrying way too much capacity. That forced Ford to spend large sums on incentives to move vehicles. Now, it sells fewer cars but makes more money on each one.
In addition to the long term gains that are likely in this stock, investors can also profit by selling covered calls against their holdings.
It's rare when investors get a chance to purchase a stock that looks so good from both a fundamental and technical perspective. Ford right now is giving investors a chance to do just that.
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