Ford has faced some serious market challenges recently but now might be the best time to buy Ford stock. The price is right and Ford’s growth is strong.
Ford Motor Company is poised for a comeback, with its stock trading under $10 and a compelling 7.71% forward dividend yield. Despite recent market challenges, Ford’s strong balance sheet, strategic investments in hybrids and EVs, and ability to weather tariff pressures position it for solid growth. While risks remain, including potential EV subsidy cuts and ongoing Model E losses, the company’s market dominance and financial resilience make it an attractive buy for long-term investors.
Ford continues forward while the market declines
It might not sound like it makes much sense, but the Ford Motor Company (F) stock price has shown growth over the past month, while the Nasdaq, Dow, and S&P 500 have all reported significant losses during the same time. What could Ford be doing that other companies aren’t? Is there something special about this automaker that makes it impervious to stock declines, or has Ford’s stock price hit rock bottom?
Consistency could be key
The stock market has seen some major highs and lows in the past ninety days. The constant threat of potential tariffs being imposed has caused many stocks to drop like lead balloons. Comparatively, GM’s stock has declined 8%, while Ford’s stock price has risen nearly 4% this year. Part of this growth could be due to Ford’s consistent financial performance and valuation, which gives it a strong potential upside for investors.
Despite this consistency and performance, there could be some risks involved, as there are with any stock, making it challenging for some investors to commit to buying Ford stock. Still, the low price makes it an attractive choice for anyone ready to add this stock to their portfolio.
Why is Ford stock up?
The increased price can’t be pinpointed to one factor, but the efforts to reduce costs can be the key reason why this stock is up. There are several factors, both positive and negative, that contribute to the company’s performance.
Positive Factors
- Ford Pro’s Strength – The Ford Por segment, which focuses on commercial vehicles and software/service subscriptions, has been a bright spot, with strong growth in sales.
- Attractive Dividend Yield – Ford offers a high dividend yield, which can attract income-focused investors and provides a buffer against stock volatility.
- Cost Reduction Efforts – Ford has focused on reducing costs, including identifying cost reductions in product design and streamlining operations.
- Valuation Metrics – Some analysts suggest that Ford’s stock may be undervalued compared to its industry peers.
- Focus on Operational Efficiency – Ford is positioning itself for long-term success by focusing on operational efficiency and expanding its EV portfolio.
- Strong Demand for Trucks – As has been the case for more than 40 years, the demand for Ford trucks is strong. The Ford Super Duty trucks and Transit vans remain the trusted names in commercial vehicles.
- Software and Service Subscription Growth – Ford Pro’s software and service subscriptions are expanding rapidly, contributing to the segment’s profitability.
Negative Factors
- General Automotive Market Downturn – The automotive market is experiencing a general downturn. Rising consumer prices and decline in average vehicle profits.
- Potential Tariffs – Ongoing trade conflicts could result in tariffs on imported goods and materials, which will harm Ford’s profits and could cause the Ford stock price to tumble.
- Economic Backdrop – Rising interest rates and increased consumer debt could negatively impact the demand for vehicles.
- EV Transition Challenges – Ford still has a strong balance of traditional gas-powered vehicles and EVs. Some consumers could face serious challenges in transitioning to EVs, especially with the current direction of the federal government.
- Profit Guidance – The 2025 profit guidance came in below consensus, which raises some concerns for the company.
Is Ford stock a good investment?
During the final three months of 2024, Ford’s revenue was up 13% year over year and the company had an operating margin of 11.6%. This was well ahead of the rest of the automotive industry.
Couple the impressive end-of-year growth with the continued focus on controlling expenses and a strong demand for Ford trucks, and you’ve got a stock that could be right for nearly every investor. The price is right for many investors to take a shot and see if putting their money behind Ford could be a great long-term strategy for growth and wealth-building. As one of the earliest stocks traded in America, Ford is a legacy choice, and it has several decades of history to show it can withstand nearly every challenge.
