I bought 1000 shares of Ford stock this morning at the market’s open at a price of $14.99. The stock pays a dividend of about 3.5% and has a P/E of about 9.9. Ford has had a rough 2014 and the stock has gone down from about $18 to just over $13 in the last 3 months. Now it is back up to $15 a share and I’m buying it because I think 2015 is going to be a much better year.
3/3/2015 Update: I just bought an additional 500 shares of Ford at a price of $16.16. The stock is down today because of poor sales in February but I think that is because of the heavy snow that has blanketed the East Coast of the United States for the whole month. The good news in the report was that the new F150’s are the fastest off the lots and showed a rise of 7% over last February’s numbers.
Ford’s F-150: The Change To Aluminum
The Ford F-150 has for years been the best selling truck in America and next month they are coming out with a brand new version that is 700 pounds lighter. It weighs less than the older models because Ford has made a substantial amount of the F-150’s body from aluminum which is lighter than steel. The new trucks will get better gas milage and better everything if you read about it at their website.
To make the change to aluminum, they have had to completely revamp their production lines at considerable expense in the hopes that the new lighter model will be the truck of the future. Obviously, this new strategy comes at a tremendous up front expense and is a big gamble. But if customers like the aluminum F150 (and initial response has been great), that gamble will have been well worth it.
Investors typically don’t like to wait for profits and thus have bid Ford stock down this year. There have been other reasons as well such as sluggish sales in Europe for much of the year.
Reasons I Bought Ford Stock
The best time to buy a stock is when good news is on the horizon and hasn’t been fully priced into the stock. It is hard to find stocks like that but I think that is the case with Ford. Here are my reasons for buying Ford stock today:
1) The new aluminum F-150 has now started production and will ship in late December. I am hoping this truck will be a big hit in 2015.
2) On 11/12/2014, Ford announced that it had its fifth straight monthly gain in sales in Europe. Sales were up about 8% with Italy and the UK being the two standouts.
3) A nice 3.5% dividend
4) The sell off in September and October made this stock cheap and while it has risen to $15 now, I feel there is further upside as the new F-150 hits the showrooms in 2015 and I believe the stock will go up to the $18 to $20 range next year.