Shares of Ford (F) are on a fire sale. After it, along with GM (GM) reported weak March auto sales, Ford’s stock fell from $12.50 and hover near yearly lows. The underperformance pushes up Ford’s dividend yield. At around 5.4 percent. Ford’s stock is now too tempting for yield-hungry investors to ignore.
Tesla’s (TSLA) stock rise also adds insult to Ford’s underperformance. The EV maker now trades at a market cap higher than that of Ford. Ford’s outlook is still promising. F-150 trucks are popular and SUVs are benefitting from healthy demand. Thanks to oil prices at historic lows, consumers are not too concerned about fuel efficiency. The Republican Party is also less inclined to enforce tough EPA standards for automobiles.
Assuming oil prices do not trend much higher, Ford’s low valuations (at below 10 times earnings) appear temporary. Value investors looking for income may want to pick up Ford shares cheaply. The company has nearly $9.70 in cash per share. Short float is very low at 2.1 percent.
Media gave a warm response at the New York auto show, for Ford’s Police Responder Hybrid sedan. The sedan gives a good balance of saving money and performance for the police. Times are tough for cities. Any cost-savings for things like maintaining an automotive fleet will drive sales for Ford.
Running between now through April 23, the auto show should give Ford some positive exposure for its future vehicles.
