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Wednesday September 01, 2010
Ford (F): Skousen's top speculation
by Mark Skousen, editor Forecasts & Strategies  We do have a select number of speculative stocks and growth funds in our portfolio. Among them, my favorite is Ford Motor Co. (F). The stock, which has been my favorite speculation for 2010, reported another blockbuster quarter. Its second-quarter earnings blew past Wall Street estimates last month and the stock now is up more than 20% from our recommended price. Plus, it is trading substantially above its moving average. Ford announced that second quarter revenue rose 17% to $31.3 billion, and earnings reached $2.6 billion, or 61 cents a share. 
Last year, the company lost money. Ford’s second-quarter 2010 sales in the United States rose 21% — nearly double the industry average. It expects to sell around 2 million vehicles in the United States this year, plus millions more abroad, with the introduction of its new subcompact Ford Fiesta, the Ford Explorer crossover vehicle and the Ford Focus compact car. It also is improving its cash flow, which will enhance its ability to handle its massive debt, currently in excess of $100 billion. Ford announced that by the end of 2011, it expects to move from a net debt position to a net cash position — in other words, it will have more cash than debt. “It’s clearly a really positive development,” said CEO Alan Mulally. “We will be able to continue to improve the balance sheet and pay down debt.” “They have been making all the right moves. It’s been impressive,” said Rebecca Lindland, an analyst with research firm IHS Automotive. “They just have an unbelievable amount of momentum right now.” Keep buying. I'd add that bonds and income investments are clearly the place to be right now, while we wait for the market and the economy to recover. I recentyly spoke with Marilyn Cohen, the Forbes columnist on bonds and, although the easy money has been made, she still sees excellent opportunities in short-term corporate bonds. She loved my pick of Ford Motor, but thinks the best income play is with Ford bonds. With Ford paying off its debt earlier than expected, these bonds are likely to be upgraded. Learn more about this financial newsletter at Mark Skousen's Forecasts & Strategies. |
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