Ford (F, Financial) has not been able to gain momentum in 2014 due to many unlucky factors. The plunge in Russian economy, reaching maximum capacity in China, and a stagnant market are short term headwinds, however the automaker’s stock has been punished because of these factors. Although Ford has recovered in the recent past, the stock hasn’t lived up to the lofty expectations. In my opinion, investors should ignore these headwinds as the company’s long-term prospects still look good and should buy Ford at present valuation. Let’s take a look at the reasons that may contribute to Ford’s upsurge in 2015, but first let’s take a look at the company’s November sales.
How did the blue oval fare?
The automobile business encountered its best November in over 10 years. What's more, except for the F-Series, Ford still pulled in noteworthy figures, especially with its Utility vehicles. In November, Ford saw a year-over-year vehicle deals decrease of 2% because of a general 9.9% decrease in its most mainstream F-Series. On the retail side, the F-Series fell 14%, however the aggregate retail decrease was a significantly more inconspicuous 3%. The F-Series is the organization's most famous vehicle and, even with the limit drop, the organization still sold more F-Series trucks than it sold Cars (area) or Utility vehicles. With both the F-Series and Car part down, it is clear the Utility segment pulled in an incredible month.
The dip in sales of trucks shouldn’t be a worry for investors. Many customers are probably just holding back on truck purchases for the moment, because they wait for Ford to launch the new F-150. If that's true, which I think it is, shareholders should see nice overall sales gains next year as I expect great demand for Ford's remodeled F-150.
Looking forward to strong growth in China
Ford's gigantic investment in China is paying off as it surpassed the 1 million unit mark with a 20% bounce in sales. Ford's China October deals were up 2% on account of the new Mondeo car. Mondeo's sales enhanced 83% YTD, and Ford's solid execution in China is required to proceed with the rollout of new vehicles in the following few months. The automaker will release the new Ford Escort and Taurus to its lineup of autos in China; furthermore, it will build production plants to match the expanding demand.
Because of the supply shortage, Ford's China September deals took a hit, and the automaker needs to guarantee that this doesn't happen once more. Ford's new gathering offices in Hangzhou and Chongqing expand Ford's yearly creation by up to 550,000. In spite of the fact that Ford is still a long ways behind companions like General Motors (GM, Financial) and Volkswagen (VLKAY, Financial) in China, the auto producer is developing at a fast rate. Ford has spilled in billions of dollars to compensate for the lost time, and the venture is paying off.
Conclusion
Ford’s profits have mainly taken a hit due to the launch of numerous new vehicles in 2014, but these vehicles have helped Ford to expand its market share in multiple segments. This means that Ford’s investment hasn’t been a waste and will reward investors in the long run. With a conservative P/E ratio and a juicy dividend, Ford looks attractively priced as is a great buy. The company’s revenue and profits will drastically increase once the European business recovers and the company gains traction in China. Long-term investors should add Ford to their portfolios.
