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Should You Buy Ford Stock After the Big Recall?


Ford Motor (F) begins the new decade with optimism as it emerges to compete in the era of smart vehicles and clean energy. Automakers are investing heavily in new technologies to keep pace self-driving carcarpooling and Electric Car. But does all that effort make Ford stock the stock to buy now?




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The November 2019 launch of the Mustang Mach-E is a major milestone in the company’s pivot towards what it calls the “digital future”. The Ford Mustang Mach-E, an all-electric crossover, made its commercial debut in the US in late 2020. Ford is starting production of the Mach-E, its competitor. Tesla (TSLA) Model Y, also in China.

And Ford doesn’t stop there — it has begun offering the all-electric pickup truck F-150 Lightning.

Ford’s investment in electrification helped propel the stock up 140% in 2021. That gave Ford a quick pass. common engine (GM) increased market capitalization for the first time in 5 years. But where does Ford stand now? If you are thinking of buying a stock, it is important to first analyze the fundamental and technical picture.

SUV recall

Ford issued a recall affecting 634,000 SUVs on Nov. 25. The automaker said potential fuel line problems could lead to fires in popular Escape and Bronco Sport models. of the firm.

Ford is urging owners of 2020-2023 MY Bronco Sport models, as well as Escapes with 1.5-liter 3-cylinder engines, to their dealerships to have their fuel injectors checked for possible cracks. This large-scale recall comes just months after the automaker had to issue a recall and stop selling the Mustang Mach-E due to battery problems.

Ford stock was largely unaffected by the news. Stocks rose slightly after the Thanksgiving holiday.

Ford earnings news

Ford stock rose after a 3rd quarter earnings beat Oct. 26. The automaker’s earnings fell 41% to 30 cents per share. Revenue increased 10% to $39.4 billion. Wall Street had expected Ford earnings to fall 47% to 27 cents per share with revenue recovering just 5% to $37.464 billion. Analysts cut their views after Ford warned of supply shortages and higher costs in early October.

The automaker lowered expectations for Q4 due to continued supply chain disruptions and inflationary pressures. Ford now predicts full-year adjusted EBIT at around $11.5 billion. This is up about 15% from 2021, but lower than the previous target of $11.5 billion – $12.5 billion.

Driving Ford’s Q3 performance was a recorded net loss of $827 million. Ford attributed that loss to supply challenges and the company’s investment in self-driving car startup Argo AI. After that, Ford will shut down Argo AI, because “profitable, fully autonomous vehicles on a large scale are slowly disappearing,” Ford CEO Jim Farley said in a statement on the 26th. October.

Shortage of supply left about 40,000 partially produced vehicles in stock by the end of September. Ford still hopes to finish and ship those vehicles in the current Q4 when the necessary parts arrive. The automaker also paid suppliers about $1 billion more than expected.

Electric vehicles will continue to play an important role in Ford’s growth strategy. Ford is aiming to reach 600,000 electric vehicles globally by the end of 2023.

October sale

Ford’s October auto sales fell about 10% due to supply problems. Sales in the US reached 158,327 for the month. That’s down from about 176,000 units sold year-on-year. The annual total is also lower than the overall growth of the auto industry of 9.1%.

Ford’s electric vehicle lineup continues to be the driving force behind sales growth. Total U.S. EV sales were 6,261 vehicles, up 120% year-over-year. That’s about twice the growth rate of the electric vehicle segment as a whole, Ford report. But that’s still a fraction of the electric vehicle market and Ford’s total sales.

The price of electric F-150 will increase

Ford’s popular all-electric pickup is about to get more expensive. On August 9, the automaker announced that the price of the F-150 Lightning model would increase to $8,500 for the 2023 model year. Ford blamed the increasing cost of materials for the truck’s production. Popular EVs cause prices to skyrocket.

The truck’s $40,000 initial price tag was set to compete with the Tesla Model 3 sedan, which retails for $48,000. The car company led by Elon Musk won’t begin production of the Cybertruck until at least 2023.

Ford officially delivered its first electric pickup at the end of May, with production still relatively low. The F-150 Lightning model received 200,000 orders when it was first announced in April. The launch of the F-150 Lightning is seen as a pivotal moment in Ford’s turnaround. The automaker has invested billions of dollars in its transition to electric vehicle production.

In March, Ford said it would spin off the company’s gasoline and electric vehicle businesses in a major corporate reorganization. The Wall Street Journal report that both operations will be kept internally, “with separate names and separate leadership structures and profit and loss statements.”

Ford cuts jobs to fund electric vehicle spending

Ford plans to cut 8,000 jobs to fund EV spending Those cuts will mainly come from Ford’s internal combustion division, Bloomberg report. In addition to the rumored job cuts, Ford also confirmed that it has secured 100% of the battery capacity needed to support its annual goal of 600,000. tram globally by the end of 2023.

In June, Ford announced plans to invest $3.7 billion to promote EVs and gasoline-powered vehicles manufacturing. That money will be used to retool and upgrade plants in Michigan, Ohio and Missouri. Ford’s investment is also expected to create 6,200 jobs in union manufacturing.

The Detroit automaker’s latest spending to expand EV production reflects Ford’s growing investment in the electric vehicle market. In mid-March, Ford renewed an agreement with volkswagen (VWAGY) will double Europe’s EV production to 1.2 million cars by 2023. The carmaker also has initial agreements with SK Battery and Koc Holding to build an EV battery plant. in Turkey.

In February, Ford increased its electric vehicle spending plan by $20 billion. That investment added to the $30 billion Ford has earmarked for electric vehicles through 2025. Those investments were followed by the separation of the company’s EV and gas units. The growing investments in the EV segment come amid a surge in sales of Ford’s electric models. The company had to close orders for the 2022 Maverick hybrid pickup truck due to overwhelming demand. Orders for Maverick 2023 will continue into the summer.


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Fundamental analysis of Ford stock

To determine whether to buy Ford stock right now, fundamental and technical analysis are key.

inflammatory bowel disease Stock Checker Tool shows that Ford stock has a IBD Composite Rating out of 34 out of 99 the best possible. It’s still far behind the top 90-plus leader, in terms of the most important technical and fundamental stock picking criteria.

Ford stock weakens EPS Rating over 41 out of 99. The rating compares quarterly and annual earnings-per-share growth to all other stocks. In the midst of the transition, Ford has a remarkable earnings track record. The company has reported more than a percentage of quarterly earnings declines over the past decade. However, estimates are pointing to growth.

IBD ranks the automaker 6th among its peers in the auto industry. But the group of automakers ranks 154th out of 197 industry groups tracked by IBD. Ideally, focus on the top stocks found in the top 40 IBD groups.

Ford Stock Technical Analysis

Ford stock is active on a cup-with-handle model with a 14.77 buy point. Shares are trading tightly just below the 200-day line as Ford stock attempts to re-establish an uptrend after hitting a 52-week low in July.

But the 200-day level proved to be an area of ​​resistance. Ford stock was meant to regain its 200-day moving average in mid-August, but quickly pulled back. The last time Ford stock traded above this level was in March.

Consider Ford’s relative strength

Ford’s relative strength line — a measure of a stock’s price performance relative to the S&P 500 — has dropped significantly after spiking higher in early 2022.

IBD research shows the importance of focusing on stocks that are outperforming the market.

Ford Stock: Buy Now?

Ford stock moves higher into 2021 and into 2022, but has fallen sharply during the recent bear market. Overall manufacturing is being challenged by supply chain woes. Sales of electric and hybrid vehicles are booming compared to a year earlier, but from a still low base.

Bottom line: Don’t buy Ford stock right now.

Although Ford is establishing a new buy point, much of that base has been built below the steep and deep 200-day line in a 10-month consolidation. Market conditions are also very difficult. Ideally, investors would like to see stocks recover above the 200-day/40-week line before they can be active again.

To find the best stocks to buy and watch, check out IBD’s stock list Page. More stock ideas can be found on our website charts and marketSmith communication.

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