Ford (NYSE:F) cannot catch a break. The covid-19 virus containment in China caused orders to freeze up to nearly 70%. At least, that is the forecast. Chances are high that sales will weaken greatly in the region.
Ford already reported losses in the Chinese region, so while losses may increase, it is not a profit-driver for the company.
A production slowdown in China may hurt vehicle sales for all players.
For investors willing to bet that Ford will recover once China businesses open again, the stock is cheap at current levels. Investors also get a dividend that yields around 7.5%. Plus, family ownership of Ford suggests that the company will not cut its debt any time soon.
Later this year, Ford will start selling Mustang Mach-E. The brand’s resurgence is gaining traction. Albeit with limited supply, pre-orders of the special edition long-range EV is sold out.
Ford may even increase production rates and bring the model to the mainstream. The economies of scale will lower operating costs and shift profit growth to the EV segment.
Risks:
Tesla (NASDAQ:TSLA) sold $2 billion worth of shares despite saying on its conference call that it did not need the cash. This additional cash helps Tesla invest in R&D and plants. In doing so, the competition heats up for the Mach-E.
Ford is a cheap stock that income investors should consider at current levels.
Disclosure: the author owns Ford shares
