Among the least-favored companies in North America, Ford Motor Company (NYSE:F) remains one of the best value plays for investors expecting continued robust growth in North American spending. While auto sales have dipped in recent months, contrarian investors have continued to pile into Ford stock, given the company’s continued profitability and propensity to return value to shareholders in the form of a dividend yield that rivals the best among large blue-chip stocks on any exchange.
Currently yielding close to 5%, investors willing to take a gamble on the automaker will be paid handsomely to continue to sit tight; as an income-only play, Ford makes sense from a yield perspective for investors willing to buy and hold for a long period of time. Taking the view of the company as a bond proxy (or simply purchasing some of the auto manufacturers bonds, another great option), investors looking for a stable stream of quarterly income may continue to be attracted by Ford’s attractive valuation and profit-generation fundamentals.
I expect significant volatility to remain in this sector, and would not be surprised should Ford’s share price dip further in the coming quarters as investors continue to assess the impact the electric vehicle market will have on conventional auto sales; that said, Ford continues to sell an impressive number of electric vehicles, rivalling the leaders in the sector.
Investors willing to make a bold contrarian play should consider a long-short strategy with Ford, shorting rival Tesla Inc. (NASDAQ:TSLA), given the extreme valuation differential the market has attributed to both firms.
Invest Wisely, my friends.
