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Ford Stock in Focus: Time to Buy a Truckload?

Published 09/11/2024, 06:59 AM
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  • The stock has been facing heavy selling since its Q2 2024 financial results.
  • Ford is revving up its vehicle deliveries, especially of EVs and HEVs.

Ford (NYSE:F) stock at $10 and change looks like a strong buy. The Detroit-based automaker’s recently released August data point to strong growth in sales of electric vehicles (EVs) and hybrid vehicles (HEVs).

In light of August’s sales figures, Ford now claims to be the top-selling U.S. automotive brand for two consecutive months. Yet, Ford stock just can’t seem to get out of neutral, as it’s still down on a year-to-date basis.

Ford Stock Price-1-Month Chart

Ford’s second quarter financial results were unimpressive, initially leading to a moderate decline.

Furthermore, Ford trades at a tempting valuation multiple times, offering a juicy dividend. All in all, value seekers and income-focused investors should consider shifting gears and test-driving Ford stock today.

Ford Stock Continues to Slide – But Why?

It’s been going on for at least a decade. Some mysterious, magnetic force keeps pulling Ford stock back to the magical round number of $10 per share.

It’s frustrating, but it also presents buying opportunities since the stock always seems to bounce off the $10 level sooner or later. For example, you could have bought F stock at $10 in November 2023 and sold it at $14.50 in July 2024 for a nice 45% gain.

Usually, there’s some obvious reason why Ford stock heads back toward $10. This time, I looked everywhere but couldn’t pinpoint a clear-cut negative catalyst. The Detroit autoworkers’ strike is old news now, and inflation has subsided since 2022.

Sometimes, value hunters have to stop asking “why” and just focus on the facts. Because Ford stock has been down so much since July, the company’s forward annual dividend yield is elevated (assuming Ford doesn’t slash its dividend in the near future). Currently, Ford offers a 5.63% annual yield, which is much higher than the consumer cyclical sector average dividend yield of approximately 1%.

Furthermore, the pullback in F stock, along with Ford maintaining fairly steady quarterly earnings over the past year, means that the company’s trailing 12-month price-to-earnings (P/E) ratio is low. On an adjusted (non-GAAP) basis, Ford’s trailing P/E ratio is 6.5, versus the sector median P/E ratio of 14.11.

August Sales Figures Seal the Deal

Now, you might wonder whether Ford’s enticing dividend is in jeopardy. Also, you may be worried that Ford stock is nothing more than a value trap.

To help quell any concerns, we can cite Ford’s August 2024 sales figures. The automaker is revving up its vehicle deliveries, especially of EVs and HEVs.

Ramp-ups in sales of F-Series trucks and hybrid models helped Ford increase its overall vehicle sales by 13.4% year over year in August. In contrast, overall industry estimates only called for a 6% year-on-year vehicle sales increase.

Breaking it down further, August’s truck sales rose 12.3% year over year, while the automaker’s all-electric vehicle sales increased 29%. Perhaps best of all, Ford’s HEV sales surged around 50%.

This supports the argument that Ford’s pivot to HEV sales is working out quite well — or at least, it worked out well in August. Was this just a fluke, or the start of a positive pattern for Ford?

Only time will tell, but for the time being, there appears to be a divergence between Ford’s robust recent vehicle sales and the Ford share price. Consequently, seekers of value and income ought to consider grabbing a handful of F stock shares while they’re still near $10.

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