Consumers Vote With Dollars
While I’d be the first to acknowledge that investing is a qualitative as well as a quantitative venture, I’ll also confess I’m a scientist when it comes to stock-picking. I use facts, figures, data and charts to pick apart and reassemble a company’s odds of success. Yet, I’ve become sold on Ford not so much based on a balance sheet and hopeful expectations in Europe, but based on something perhaps more important.
Consumers love Ford. Maybe it’s justified, and maybe it isn’t. Either way, auto buyers are committed to the brand, to the point of planning on buying one when it comes to their next auto purchase.
It’s not just a perception either — auto owners have said it. In a Consumer Reports survey published in January of this year, Ford topped the “most likely to purchase” list of automobile brand names; 16% of the U.S. populace was leaning toward Ford as the maker of their next vehicle. Ford scored second — only behind Toyota (NYSE:TM) — in overall brand quality in the same survey.
In a separate survey performed by Polk at the beginning of the year, Ford was the best-scoring automaker name in terms of overall brand loyalty. As it turns out, more than 61% of current owners of Ford-family cars (Ford, Lincoln, Mercury) had owned one of those brands before purchasing their current vehicle.
Throw in the fact that there are more Fords on U.S. roads than any other manufacturer’s — 17.2% of the nation’s vehicles to be exact — and what you have is a clear winner on the battlefield of consumers’ minds.
In other words, Ford might be a great investment simply because it makes great cars. I guess the classic investment theses never really go out of style.
Normally, I’d not be impressed by these kinds of opinion polls, as consumers have a funny way of saying one thing and then doing another. It’s also pretty safe to say European auto buyers don’t quite have the same affinity. Yet, the kind of loyalty numbers Ford puts up in the U.S. might well be enough to stave off major problems until Europe regroups … and it will.
In the meantime, excessive fears about Europe’s auto market and an underappreciation for what Ford is doing domestically have made the stock a bargain in my eyes — not merely cheap.
As of this writing, James Brumley was long F.