Monday, October 10, 2016

Why I like Ford Motor Company

Hi everyone I am working on a new project that will be announced soon. I am looking to get back to making videos and blogging with increased frequency.

Today I am taking about another auto company which I have made purchases! I once read somewhere you don't invest in autos. This was very true as the companies like GM didn't make it through the 2008 collapse without being helped by the government. Ford did make it though the 08 recession but shareholders would of been nervous not to mention the dividend being cut and share price on life support. Now fast forward both these companies have better management teams and are being valued as if they were still in trouble. The P/E ratio and dividend yield of Ford (F) are a couple of reasons I like the company. The P/E ratio is extremely below the market average. The leadership is also making many good moves they have stream lined their car lines, the product is quality, and it is bringing back popular vehicles like the Bronco. The big questions include: Is the dividend safe? If a recession hits the U.S. economy does the company have a conservative balance sheet? Will it survive and keep investing in the future? I have to answer yes, yes and yes. Looking at recent earnings, Ford can take a big reduction on it's sales and still be able to cover all obligations which include the dividend. This is huge as buying at such a discount and low P/E gives a huge cushion compared to other comapnies.

I think buying now is a great time as there could be a repeat of a special dividend at the beginning of the year. Ford management has said in the past it wants to share profits with shareholders. Sells have slipped from all time highs, which is expected but they are still very good.

I am long F shares! I also write cover calls on my shares! Many ways to make money and protect the down side.

1 comment:

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