Ford Motor Company: Will China Sales Drive F Stock Higher?

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Ford Motor Company (NYSE:F) has placed strong bets on China sales and investors may now want to ride shotgun on Ford stock. This is because Ford, along with its joint ventures, has begun to earn huge dividends from its China wager.

Ford Stock (F): Will China Sales Drive Ford Higher?

On Wednesday, the nation’s second-largest auto maker by revenue announced that it sold 96,450 vehicles in China for the month of August. That marks a 22% jump from a year ago. The Michigan-based automaker said sales were buoyed by higher-than-expected demand, not only for it new Edge SUV, but also for its Focus and Escort models.

The news sent Ford stock, which is down some 10% year-to-date, higher by about 0.40% in the pre-market session. F stock has underperformed the 7% rise in the S&P 500 and the 6.67% year-to-date drop in General Motors Company (NYSE:GM). Will stronger China sales help Ford shift gears?

The breakdown is quite impressive. Consider, Ford’s passenger car joint venture Changan Ford Automobile sold 75,228 vehicles, marking a 26% jump. Meanwhile, Ford’s commercial vehicle investment in China, Jiangling Motor Corporation sold 19,951 vehicles, up 16%. These numbers suggest that Ford is growing market share in the world’s most populous country.

The Bottom Line on Ford Stock

So why not bet on Ford stock now? At around $12 per share, F stock is priced at a forward price-to-earnings ratio of 6.7, based on fiscal 2016 estimates of $1.87 per share. This suggests that Wall Street has low expectations for the company, given the S&P 500 index is priced at a forward P/E of 17.

Ford stock should be in any portfolio, especially given its safe and consistent dividend yield of 4.8%, which is more than twice the S&P 500. And from a risk-reward perspective, its strong China sales are more than an encouraging sign.

As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/09/ford-stock-f-china-sales/.

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