Ford (NYSE: F) Surges To Decade Highs

Shares of Ford (NYSE: F) haven’t traded above $20 since the long hot summer of 2001. In the intervening two decades, they’ve fallen as low as $1.50, but it’s starting to look more and more like they’ll be at $100 before they’re ever that near $1 again. The current rally has been underway since April of last year, and has sent Ford shares up more than 400%. This is obviously great for those investors who’ve been part of the ride, but what about those of us still on the sidelines? Fear not, there are plenty of reasons to think this is still the first phase of a multi-year rally, as Ford turns more and more to the future, and in doing so drops the shackles of its industrial past. 

A 10% jump on Friday meant that shares of Ford were among the best performing of US equities on the day. The move came as the folks over at Jefferies included them on a list of stocks they expect to outperform the broader market in a period of rising inflation. They see Ford, and others, as being well able to “benefit from easing distribution pain, leverage surging utilization/stepped up capex and insulation from significant wage pressures and so likely to fundamentally outperform both peers and broader equities."

Lofty Goals

It was a solid vote of confidence for the Michigan carmaker to get, and helped close out a week of bullish momentum. On Thursday, Ford had announced that they were no longer taking reservations for their new F-150 Lightning pickup truck, and are aiming to be turning out more than 88,000 electric F-150s by January of 2023. If they can achieve this they’ll have beaten GM’s electric version of their Chevy Silverado to market, and in doing so will put themselves in prime position to be considered the second biggest electric vehicle (EV) maker on the market. 

So far, the numbers appear to back this goal up. Their November US numbers saw EV sales jump 150% on the year, a rate that was 3 times the growth of the overall EV segment. This kind of growth has helped Ford’s EV market share to effectively double in the past twelve months. Towards the end of last month, Morgan Stanley forecasted their EV sales to reach 150,000 in 2022, 475,000 in 2025, and more than 1 million in 2030. Ramping up production is clearly at the top of management’s agenda. Indeed, it was only last week that Ford’s CEO James Farley said that they’ll have to scale their EV capacity to compete with Tesla (NASDAQ: TSLA). 

This energy and forward-looking approach is a far cry from the Ford of ten or fifteen years ago that seemed stuck in the past and unable to innovate its way into the 21st century. But this has changed, likely forever. For as Farley said last week, “you should expect us, as we go electric, to reinvent the brand”.

Getting Involved

It may be another few quarters yet before Ford is able to pump out solid group revenue growth, with October’s Q3 earnings report showing revenue actually contracted 4% compared to the same quarter in 2020. But they managed to post an overall profit in EPS, and based on the stock’s performance in the past year, Wall Street is more than happy to give them some leeway when it comes to completing the EV turnaround. 

Shares have broken conclusively above the $18 mark which was where they’d been turned back several times in the past two decades. This means that it can now act as the first line of support in the event of any pullback. To the upside, the mid to high $20s looks like a decent area to aim for as a next target, as this is close to where Ford shares topped out at the turn of the millennium. It’s been a fast twenty odd years since, but it has to be said that Ford is looking better than ever.