How to Buy Ford Stock (F)

Introduction

Buying Ford Motor Company stock can be a good investment, especially if you’re looking for undervalued stocks trading below $20 per share. With its impressive product portfolio, including America’s best-selling pickup (F-150), solid management, and innovative business strategies, Ford Motor can deliver strong returns with time. 

Highlights and Key Takeaways

• Henry Ford established Ford Motor Co in 1903. It has since maintained a strong brand name, global presence, and recognition for over a century.

• Ford Motor Company’s stock price is below $20, making it one of the best stocks to buy now on a budget. 

• The automaking industry is undergoing a transition to electric vehicles (EVs), which has the potential to affect Ford’s revenue, execution risks, capital losses as well as stock prices in the near term. 

• Ford offers a high dividend yield, making it a good buy for dividend investors.

Understanding Ford As an Investment

Why Invest in Ford?

Ford is one of the world’s largest automotive companies, with its stock listed in the S&P 500 and S&P 100 indices.

As the world moves towards green energy, Ford is strategically investing in electric vehicles (EVs) – a market with high growth potential. This might affect Ford’s relevance for decades and position it to navigate the industry’s global shift as estimates show over half of US new car sales will be electric by 2030. A good example of its forward-thinking approach and innovative business model is the F-150 Lightning, which was among the top 10 selling electric trucks in 2023, with 20,365 units sold.

However, Ford stock has an attractive valuation. Understanding valuation is crucial when learning how to invest in stocks as it helps you know when to buy or wait. With a lower price-to-earnings (PE) ratio of about 7x, Ford outshines many competitors, including the EV automaker major Tesla, which has a PE ratio of approximately 75x. The low valuation could mean F stock is an undervalued gem or represents low investor confidence.

Risks Associated With Investing in Ford

While Ford has a strong product portfolio and positive future outlook, there are a few potential risks associated with buying Ford stocks, for instance: 

• Market Volatility: Computer chip shortage, economic downturns, and the transition to electric vehicles can affect car sales as well as the performance of Ford’s stock. 

• Competition: The automaking industry is highly competitive. This means Ford must execute strategic plans to maintain and increase its market share.

• Execution Risk: Ford’s ambitious plans for EVs and other new technologies carry execution risk. If this doesn’t function as planned, the stock price might suffer.

• Dividend Cuts: If you’re choosing Ford stocks for dividend investing, the current rate is attractive. However, companies often cut or eliminate their dividend when under financial pressure. So, there’s no guarantee of future high dividend yields.

How To Buy Ford Stock

Choosing a Brokerage

If you’ve decided that the Ford stock is a good buy, your next step is to choose a reputable broker and open an account. Brokerage accounts are investment accounts that allow you to buy stocks of different companies and make other investments on a single platform. Here’s what to look out for when choosing a brokerage for buying Ford stock: 

• Trading Fees: Some brokers offer commission-free trades on stocks and ETFs. Check the fee structure and note every type of fee the broker charges before opening an account.

• Platform Usability: Test the platform using a demo account to ensure it’s easy to navigate and that you’re comfortable using it.

• Customer Service: Opt for stock brokers who offer 24/7 customer support. Also, consider how quickly and efficiently the broker’s customer service team responds to inquiries by sending a general query.

• Investment Options: Some brokers allow you to buy fractional shares of stocks, which can be useful when you don’t have enough money for a full share. You can also consider the other investment options like ETFs and currencies that the broker offers, in case you want to diversify later.

• Research and Education: If you’re new to investing, educational resources like webinars, blogs, and videos come in handy. Some brokers also offer advanced research tools and data useful to investors of all levels.

Choosing a reputable, regulated, and top-rated broker is worth every minute invested. So, don’t settle for nothing but the best stock broker as your capital and personal details are at risk.

Placing a Stock Order

Your next step in learning how to buy the Ford stock is placing an order, followed by logging into your brokerage account. Use the search bar next to find the stock you desire to buy. It’s helpful to know the stock ticker symbol, in this case, F, for Ford, but the company name also works. 

You will then need to decide the investment amount. Generally, experts recommend investing no more than 5–10% of your portfolio in a single investment. After knowing how much to invest, it’s time to place your stock order. You’ll have two order types to choose from: 

• Market Order: This order tells the platform to execute the trade at the best possible price immediately. The price might be slightly higher or lower than you expected.

• Limit Order: This option allows you to set the maximum price you’re willing to pay per share. The order will be executed only if the price reaches your limit or goes lower. 

Once you’ve chosen your order type, double-check all the details (stock symbol, number of shares, order type, and price) and hit the submit button. You can then track your order status on the platform to know if it’s filled or still waiting.

Monitoring Your Investment

Understanding Stock Performance

You’ve snagged some Ford stock, but the journey doesn’t end there. Monitoring the investment will help you understand its performance and imply your decision to hold or sell. It involves reading stock charts and financial reports. 

Charts can seem intimidating at first, but we’ll help you decode them. Essentially, the vertical axis (y-axis) denotes the stock price and the horizontal (x-axis) shows time. You can change the time frame to see the price movements in hours, days, months, or years. Using the F chart below, let’s uncover the basic stock chart terms you should know.

• Open/Closed: The open is the initial price of the F stock when the market opens while the previous close is the price the stock was trading at the end of the previous trading day. In our chart above, the previous close is $12.19 and the market is currently closed.

• Day’s Range: This shows the lowest and highest prices for the stock throughout the day. In our example, it’s 12.16 – 12.39.

• After Hours: The after hours in our example is $12.16 showing the price F stock was trading for outside the regular market hours.

• Market Cap (Mkt cap): Market capitalization shows the company size (number of shares multiplied by current share price).

Besides reading charts, you should check out:

• Ford’s financials: Understand the financial health of the company.

• Ford News: Keep an eye on news and events that might impact Ford or the auto industry, for instance, new car launches, economic data, competitor moves, and industry regulations.

• F Technical Analysis: Know the entry (buy) and exit (sell) points for F stock.

• Ford’s Investor Relations Page: View Ford’s quarterly statements, annual reports, and other reports to understand its revenue, assets, liabilities, and future outlook.

When To Sell Your Stock

Selling your Ford Motor Co holdings is a personal decision. However, here are some factors you should consider while making a sale decision. 

• Investment Goals: If your investment goals are met, like reaching a target price or generating enough income, selling your holdings is logical. 

• Company Fundamentals: Has the company’s management, strategy, competitive edge, revenue, or other crucial aspects changed? If so, it might be time to reconsider your investment. 

• Market Shift: If you’re no longer positive about the auto industry or Ford’s future, selling the stock can help you mitigate risk and sleep well at night. 

However, never panic sell. A temporary dip or market crash shouldn’t trigger hasty decisions. Remain on top of your investments and assess situations calmly. 

How To Invest in Ford With Funds

Besides buying individual stocks, you can invest in Ford in the following ways for diversification. 

• Index Funds: These are diversified and low-cost investment baskets holding hundreds of stocks. They mirror or track the performance of a specific market index like the S&P 500. Since Ford is a component of this index, most funds include it.

• Exchange Traded Funds (ETFs): These funds also give you exposure to hundreds of bonds and stocks, reducing the risk of investing in one company. You can research ETFs that own Ford shares like the Schwab U.S. Dividend Equity ETF (SCHD). 

• Mutual Funds: Similar to index funds, these professionally managed baskets hold various stocks. You can look for those including the Ford stock. However, mutual funds are usually more expensive in terms of fees than index funds because of the active management. 

You can trade EFTs and index funds with the same stock brokers if they offer them. So, learning how to buy ETFs isn’t very different from purchasing individual stocks. And just like stocks, trade ETFs with a regulated broker for your safety and peace of mind.

Conclusion

Buying Ford stocks can take less than 10 minutes. You only need to open and fund a brokerage account, enter Ford’s ticker symbol (F) in the search bar, specify the amount to purchase, and place your order. But remember to only open accounts with top-rated and regulated brokers. 

To reduce your investment risk and diversify, you can invest in Ford by buying EFTs and index funds that own F shares. 

FAQ

How Can I Purchase Ford Stock?

The easiest way to buy Ford stock is through an online brokerage account. Enter Ford’s ticker symbol (F); specify the number of shares to buy, and choose the order type. If your broker offers fractional shares, you can specify the dollar amount instead of number of shares.

Does Ford Pay Dividends?

Yes, Ford pays dividends, making it a good option for dividend investors.

Are Ford Shares a Good Buy?

Ford shares can be a good buy for some investors because of the low valuation, strong product portfolio, and positive future outlook. However, the decision to buy is personal and can depend on different factors including your risk tolerance and financial goals. 

What is the Best Stock To Buy Right Now? 

The best stocks to buy right now are the undervalued gems with low valuation and sustainable plans for the future.