Ford stock (NYSE: F) is currently down 2.15% today, but it may be a good EV buy. The electric era is upon us, and Ford has rolled out plans to implement an ambitious, all-encompassing plan to make jumping on the electric wave (no pun intended) as seamless as possible. It plans to do so with the introduction of its commercial fleet.
Ford is investing $22 billion in electrification through 2025 as part of its strategy to lead in areas where it has a competitive advantage. The business is ‘going electric’ with its most iconic vehicles like the F-150, Mustang, and Transit, with more additions to come in the future. In addition to zero-emissions versions of its most popular cars, Ford is leveraging electrification to bring more of what consumers value: performance, capability, and productivity.
The company will release the electric Bronco, F-150 series, and Mustang Mach-E SUV. That will help the company compete with the one and only Tesla, which now dominates the EV industry. Ford (F) is one of the top ten in the S&P 500 in 2021, with a year-to-date gain of about 63 percent. The stocks of legacy manufacturers are on the rise in 2021. At the same time, Volkswagen and General Motors outperform the markets and their pure-play electric vehicle contemporaries. Is it a good time to invest in Ford’s stock (F) right now?
The answer to if it is an excellent time to buy Ford stock right now is that stock has a great potential to grow but may experience some downturns if we enter a recession. In the past, I have like Ford for the dividend, which is cut. Now that the company has come back, we will have to see the growth and if the company will return the dividend.
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Ford stock is Winning in 2021
Detriot automakers have increased their investments in electrified vehicles and self-driving cars. Ford’s investments in these 2 sectors have expanded. GM has also boosted its anticipated capital expenditures for zero-emission cars. Meanwhile, while General Motors has committed to a zero-emission future and stated that the company would only sell zero-emission vehicles by 2035. However, Ford has not set a date nor said they would stop making ICE (Internal Combustion Engine) vehicles. However, F has been stated that it will only offer electric automobiles in Europe by the end of this decade.
General Motors has also set a goal of selling one million electrified vehicles by the year 2025. However, Tesla, the gold standard for electric cars, might sell over 1 million electric vehicles in 2022 alone. GM objectives, on the other hand, are more aggressive than those of the overly valued electric vehicle startup businesses, as it intends to sell more electric vehicles than Lucid Motors by 2025. Even though it is a pre-revenue firm, Lucid Motors has a pro forma market capitalization of about $40 billion. The skyrocketing valuations of pure-play electric car firms contrast with traditional automakers such as Ford, which buy stocks and whose valuations remain depressed despite the steep rise in 2021.
Ford has a market valuation of little less than $60 billion, while NIO, a Chinese electric vehicle startup, has a market capitalization of about $75 billion. Tesla’s market value is approximately $650 billion, more than triple that of Toyota Motors. At its height earlier this year, Tesla was worth more than all of the world’s biggest automakers combined.
Ford stock valuation
Ford is currently priced at a PE multiple of 12.8x NTM (next 12 months). While valuation multiples appear to be high compared to historical averages, Ford and other legacy automakers have seen a rerating. General Motors recently reached its highest price level since emerging from bankruptcy in 2009.
In addition, Ford’s earnings in 2021 are likely to be muted due to a severe semiconductor shortage. Due to the chip scarcity, Ford expects to lose nearly half of its second-quarter output. Due to the chip scarcity, it lost 17% of its first-quarter production and expected to lose 10% of its second-half production.
According to CNN Business’s consensus projections, Ford’s median target price of $16 represents a 5.3 percent increase over current costs. Its lowest target price is $11, and its maximum target price is $18. Eleven of the 23 analysts covering the stock have a buy rating, while ten have a Hold rating. One analyst rates the automaker as a sell. Analysts on Wall Street are equally optimistic about Ford.
Given the positive reception to Ford’s electric vehicles, the stock could continue to climb. In addition, the business may reconsider its dividend, which it has stopped until 2020. Ford stock appears to not only coming back under its current leadership but is also a play on the burgeoning electric car industry. With pure-play electric vehicle firms commanding extravagant valuations, legacy manufacturers such as Ford and GM appear to be a brilliant opportunity to play the vehicle electrification sector at a decent price.
Ford Stock Pivots