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Why Ford is a Good Buy

August 16, 2014 | About:
sandyinvestment

sandyinvestment

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After having a slow start to 2014, Ford's (F) share price is finally gaining pace. The company released decent quarterly results and its prospects look good. Ford still has a lot of room to run, which is why it is a good buy at present valuations. Let's take a look at Ford's outlook.

Bright Future

The organization is relying on its new launches to drive development. Case in point, Ford's Fusion sedan, with an aggressive design, is procuring plaudits. Its novel design and better mileage, supported by the Ecoboost turbocharged motor, have helped its success.

The following in line is the Escape, with its third-era display that has sent sales soaring. It runs parallel to the success of Fusion, and there are possibilities of both of them touching the 300,000 yearly sales check in the US. The Escape features open to seating, enhanced driving performance, and better efficiency. It can also be used as an occasional towing vehicle.

Passage also saw a rise of 6.6% in its European sales in the first and second quarters this year. The organization continues to drive high sales in retail, armada, as well as business vehicles. Since Ford plot its turnaround strategy for Europe two years back, it has propelled 15 new vehicles and has more lined up in the second a large portion of the year. Passage should keep picking up footing in the European auto showcase as it recovers.

Also, Ford should also profit from the increased effectiveness of auto-assembly plants. As per Alix Partners, 58 of the 100 largest auto-assembly plants in Europe were running at 75% productivity in 2013, up from 29 plants in 2012. This further decayed the conditions of the automakers.

Passage, alongside other auto makers like Peugeot and General Motors, is shutting down numerous plants all over Europe and reducing the workforce to handle the absence of profit and dipping sales. Passage has closed two creation sites in the U.k. also will close a real assembly plant in Belgium in 2015, dispensing with some 6,200 jobs altogether. This will decrease Ford's generation by 350,000 vehicles and will increase the proficiency of different plants. Passage accounts for about 18% of Europe's aggregate excess plant limit, so its sure that increasing efficiencies of the existing plants will put Ford right on track to reach its objective of coming back to benefit in Europe by 2015.

This move is required to profit Ford by about $500 million in yearly savings.

Focusing on fuel productivity

With increasing fuel prices, there's interest for vehicles with better mileage figures, and to take care of this demand, Ford is restructuring its Dearborn Truck Plants for the creation of its F-150 trucks to be propelled one year from now. The organization's F-Series trucks are relied upon to increase more footing with the approaching cutting edge F-150 that features military-grade aluminum amalgam body. This reduces the body weight, thus enhancing the mileage.

Despite the fact that this will prompt high costs at first, Ford should profit over the long haul as it reduces fuel consumption through using aluminum combination instead of steel for the truck's external body. The organization has chosen to relinquish close term profits in the wake of attaining better sales and higher profits over the long haul. It is estimated that in the following 10 years, around three-fourth of trucks will use aluminum, so Ford is making a smart move by positioning itself for what's to come.

Conclusion

Ford may not issue a strong viewpoint for the continuous quarter, however it should be noted that the organization is focusing on long haul gains instead of short-term profits. So, if Ford issues a powerless standpoint and declines, investors should consider this as a purchasing open door as the organization looks set to show signs of improvement over the long haul.


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