I won't bore you with the details of how compounding works, or the benefits of it. But you can surely look it up if you want to know what it is, and how it works FOR your investment.
I have to admit for at least the past two years I have questioned my position in Ford. I mean, the whole point to owning shares of any company is to make money, right. Not just in terms of those compounded dividends mind you. But you want to see gains as well on the underlying shares themselves.
But anyone watching Ford Motor Company stock over at least the past year knows all too well that at best, the stock has performed rather sideways. And, in my humble opinion, Ford stock has actually UNDERPERFORMED. For whatever reason it has just had difficulty getting a good footing in the stock market, and was extremely underlooked.
BUT, in many ways that also presents a bit of an opportunity. Why? Simply put, to some extent simply because the stock has been so neglected by investors, it seems apparent (and the math seems to suggest it) that based on the actual performance of the company itself, the stock has actually been—and for a terribly long time—UNDERBOUGHT.
That just simply means that if you are indeed buying shares during this period, you are getting shares at a relatively good price compared to what the real underlying value of the shares happens to be. They're just not trading there because either no one is paying attention, or no one cares.
Okay, there has been STILL some lingering trepidation from the whole bailout thing of days past that befell the auto industry in America. BUT, YOU WILL REMEMBER FORD MOTOR COMPANY NEVER GOT BAILED OUT unlike ALL others in the U.S. auto business.
GM, on the other hand, did in fact take the money offered to them in the bailout, but as far as stock performance goes they really never did suffer the same woes Ford has ever since. But that's for another day.
So why I am still long Ford even after considering selling my shares several times over the past three or four months?
I just KNOW what the stock is worth, and I tend to think that eventually so will the rest of the market. The fact is that Ford is still very low on the debt side, they have cash to spend, and they are still largely benefiting from the Mullaly days, AND from the downsizing they did, along with the renegotiations they conducted with the unions and so on and so forth.But what was it that sealed it for me today to decide to continue to be long Ford for at least a while longer?
It was just recently announced that Ford remains the #1 seller of pickup trucks in America. The F-150 is simply, according to the buyers, the best truck on the road and the sales prove this year over year over year DESPITE THE JOKES. No truck outperforms a Ford truck. Simple as that. Otherwise, someone else in the pickup truck portion of the market would be fast on their heels. It's simply not the case, and so jokes be damned, Ford trucks are #1. Still.
But did you also know that for FOUR YEARS IN A ROW Ford is also the leader in auto sales among U.S. carmakers? It's true. They have the lead four years running. Granted, they may not have the best selling car in America. But for the past four years they have outsold in total volume the other U.S. car manufacturers.
That's not really a small deal, folks.
What's more, they have been in an ongoing effort to make their luxury line of Lincoln cars more of an experience, and they have been succeeding in doing that. Moreover, the styling of Lincoln cars is vastly improving. Although I do feel they still have some work to do here to overtake Cadillac, BMW, Mercedes, and let's not forget that MANY higher luxury lines have begun to make more strides in the marketplace to get their cars into the hands of more buyers who otherwise might not have been able to afford them.
Aston Martin for example. Certainly Mazerati and Jaguar have been doing this. Jaguar, by the way, used to be owned by Ford.
And the stock has had a recent amping up of share price. So FINALLY, after quite a long time the shares are starting to show some signs of life. Granted, that can be short lived as has been proven in the past when shares ran up to nearly $18 a share and then dropped significantly back down into the $9-$12 territory and stayed there.
But here's something else that strikes me. That's the recent passing of the new Trump tax law. Look, NO ONE else in the U.S. auto industry is better poised to take advantage of the tax breaks, and since they already have the best selling truck in America, and are the best selling U.S. car maker in America, with more and more Americans who will invariably have more money in their pockets to spend on cars, OF COURSE FORD MOTOR COMPANY IS GOING TO BE A STRONG BENEFICIARY OF THIS.
Bottom line is that I don't think Ford is out of the woods. Nor is their stock for that matter. This is a short term boost to their share price and I am not going to get ahead of myself thinking, "This is it. Now we go to the moon." But do I think Ford stock is headed for a newfound happy place? I do, and in full disclosure I am long Ford AND I intend to buy more shares within the next week.
I will be watching my Ford Motor Company stock very closely. But right now, based on what I know behind the scenes (all the math I won't bore you with), I see ABSOLUTELY NO REASON TO SELL FORD MOTOR COMPANY shares right now. In fact, I'd BUY MORE.
Okay, okay...for those who want NUMBERS! I know you are out there. By 2nd quarter 2018 I see Ford's shares being traded for just under $16 per share. So for those who AREN'T privy to the quarters, that means that I predict Ford shares will be trading at just under $16 per share by the time my 45th birthday rolls around.
THAT'S JUNE 1ST FOLKS, AND I DO TAKE PAYPAL IF ANYONE WANTS TO SEND ME A PRESENT.
Fear not. You can use some of your proceeds from Ford's rising valuation to send me a gift.
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