As the only American car company not to receive a bailout, many investors are wondering if now is the time to buy Ford Motor Co. (NYSE: F)
Clearly, there's a lot to like. For one thing, Ford stock is up over 20% since Dec. 1.
For another, Ford's restyled car lineup now appeals to a much broader group of new customers well outside the "big truck" world.
So has Ford finally turned the corner?...
Let's take a look under the hood, starting with sales here at home.
North America Leads the Way
Ford's home turf is North America so it should come as no surprise that the region is the company's most profitable. It also shouldn't be a stretch to understand why Ford's F-Series truck is the No. 1 selling automobile in North America.
In all, the F-Series accounted for nearly 650,000 units sold in 2012 representing a 10.3% increase from 2011. This is the third straight year of annual increases, making 2012 the best sales year for truck sales since 2007.
Operating margins are healthy too. The North American division posted three consecutive quarters of pre-tax profit of over $2 billion and operating margins of more than 10%. Interestingly, while these numbers improved profits in terms of the units sold, the real story was in how customers chose to load up their vehicles with more expensive options.
Among them, women were among the most active. This isn't by chance. The number of women with licenses is now greater than the number of men with licenses. And according to researchers, women simply prefer safer, smaller and more fuel-efficient cars.
In contrast to the Ford of old, the new Ford is very aggressive in taking advantage of this trend. Its small and mid-sized cars cater specifically to the women drivers and their tastes.
And finally, along with Toyota , Ford is now a market leader when it comes to hybrid and plug-in vehicles. In fact, Ford's primary driver for growth in the U.S. is the new C-Max Hybrid, which is apparently going to get a whopping 100 mpg rating from the EPA if rumors are to be believed.
Europe Could be Ford's Flat Tire
If Ford is going to stumble, Europe's going to be the reason why.
Ford's European division is already anticipating losses of $1.5 billion in the coming year, according to Bloomberg.
Not surprisingly, the European debt crisis has crushed automobile sales to 20-year lows on overall demand that has dropped by nearly 20%.
Ford's "Europe" is only operating at 52 percent of its capacity. That's not only producing mounting losses but will likely do so into late 2013 before a slight improvement in 2014, according to the company.
But I do like the fact that Ford recognizes these problems and is addressing them head- on.
For instance, the company closed three of its European plants as part of an aggressive plan to stem mounting European losses.
Interestingly, these measures are happening while Ford is simultaneously rolling out new vehicle models in an attempt to gain market share during the crisis.
That's a bold move and that will leave the company well-positioned when the situation in Europe eventually improves.
Ford Is About to Fire on All Cylinders in Asia
Ford's biggest wildcard is Asia, where it's already invested nearly $5 billion and is expanding rapidly with plans to gobble up market share from Japanese competitors and GM, which has been there for years.
In particular, Ford has set an ambitious goal to double Chinese production capacity, to 1.2 million vehicles by 2015. The company has already invested in new factories across China, Thailand and India. Several have already opened, and more are under construction.
Once all factories are completed, Ford estimates it will have capacity to produce nearly 3 million vehicles a year in Asia for sale into Asian markets.
Ford management is also well aware that it needs to add more luxury-model choices for increasingly wealthy Chinese consumers. Ford's China sales currently are centered on the Focus but a luxury Lincoln could easily be the next big seller in China.
If Ford is to really make it big, the company needs to strike while the iron's hot. That means taking advantage of the ongoing Chinese/Japanese feud that has caused Japanese automakers to fall out of favor.
And the company must be prepared to compete with major incentives from the likes of Honda and Toyota in 2013 that have been offered in an attempt to regain loyalty from nationalist Chinese consumers.
When to Buy Ford: Waiting for a Pullback
Technically speaking, Ford's share price is up over 50% from August lows. At $13.57 per share, it blew through its 52-week high of $12.96 with almost no resistance. In fact, the stock has garnered so many headlines recently that it is looking more like a high-tech momentum stock which begs the question…
Is it too late to buy Ford?
No. But, I would certainly wait to buy on pullbacks – 50% moves rarely go undigested and against the backdrop of further fiscal follies in the United States, there's bound to be one or more pullbacks in the months ahead.
I'd look carefully in the $11.33 neighborhood, which would put Ford right around its
50-day moving average.
What if you already own Ford?
Many investors do, and I'd think seriously about holding on (with the appropriate use of trailing stops as advocated by Money Map's Chief Investment Strategist, Keith Fitz-Gerald).
Ford's story is a positive one for the long-term investor. Unlike a lot of its competitors, the company has a coherent strategy that appears well-equipped to deal with potential global problems yet still be able capture substantial growth in the process.
About the Author: David Mamos brings nearly 15 years of analytical experience to the table with experience ranging from big-picture fundamental analysis to highly technical trading decisions. He began his career working as a financial advisor with Royal Alliance in 2001 and helped clients with portfolio management as well as buy-sell decisions before transitioning to the development, implementation and execution of trading strategies for aggressive investors.