Ford (F) celebrates, General Motors (GM) scratches its head
Today's Financial News - Posted October 31, 2008
Ford (NYSE:F) and General Motors (NYSE:GM) are two very different companies with significantly different product offerings. Yet investors continue to value the two companies as if they are both doomed for failure. Smart investors are making money from the flawed theory.
By Andrew Snyder
Baltimore – (TFN): Workers in Detroit are celebrating today. After wave upon wave of layoff notices and factory closures, Ford (NYSE:F) employees are celebrating a re-hiring event. Thanks to Ford re-starting its 2009 F-150 truck line, nearly 1,000 workers will be stamping their time card.
Ford is making a risky move. After all, its truck sales were down 27% last month and many experts say we have yet to reach a bottom in the industry. But company executives see a profit opportunity.
With one of the best-selling product lines in the history of automaking, Ford believes it must concentrate on the profitable line if it wants to ensure future success.
Officials insist that pent-up buying demand created from the credit-industry freeze is growing and truck-buyers will flock back to showroom floors over the next several months. After all, many businesses depend on reliable pick-up trucks for their daily operations.
As investors, we need to look at today’s news as less of a human-interest story and more as an in-depth look at the company’s financial situation. Ford’s willingness to put another thousand names on its payroll roster proves its short-term liquidity and its long-term odds of success.
When General Motors (NYSE:GM) and Chrysler are begging for merger assistance in a last-ditch shot at success, Ford continues its transition into a leaner, smarter manufacturer.
As of their last earnings reports, Ford had nearly twice as much cash on hand as General Motors and its operating cash flows were nearly $10 billion higher. Ford’s liquidity issues are miniscule compared to GM’s problems.
Even with Ford’s outlook significantly brighter than its Detroit counterparts, its share price has been drug into the mud. Over the last twelve months, shares have dropped by nearly 75%. General Motors, with a much smaller shot at survival, has seen its shares fall by 85%.
Fortunately, Wall Street is realizing Ford is worth more than $5 billion. Over the past five days, share price has risen significantly. And investors that followed my buying recommendation on Monday are now sitting on gains of nearly 20%.
Fortunately, shares of Ford will continue to rise. If you do not have any shares of Ford, now is the time to buy.
Detroit’s hopes of success are rising with every passing day. As more and more cries for industry assistance hit Washington, the likelihood of a significant bailout increase exponentially. Even if you think it is too late for General Motors, do not toss Ford into the same category. It is much better managed, has far greater financial stability, and its products are still in demand.
Take a look at shares of the company and see if they meet your investing criteria. You will like what you see.
Next Article: Porsche-engineered VW hedge fund massacre signals next leg in commodities rout!
Be the first to leave a reply.
Your comments are welcome
Follow TFN via RSS or Twitter |
 |
 |
 |
Advertisement
Latest Headlines
- The Big Picture for Sinobiopharma, Inc. (SNBP)
- Beazer Homes USA, Inc. (BZH) and Hovnanian Enterprises, Inc. (HOV) up despite horrid housing news
- The FDA catalyst: 2010 moves in MannKind (MNKD), Roche Holding (RHHBY), Acorda Therapeutics (ACOR) show it still works!
- Steepest drop since Feb. 2009: Here we go again!
- Is the silver run over? Coeur d’Alene Mines (CDE), Silver Wheaton (SLW), Alto Group (ALTO), Hecla Mining (HL), Endeavour Silver (EXK) close down