Ford Motor Company (F) Stock Will Gain 20% in Trump’s First Year

Ford stock - Ford Motor Company (F) Stock Will Gain 20% in Trump’s First Year

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However you slice the valuation pie, whether by earnings or sales ratios, shares of Ford Motor Company (NYSE:F) are a screaming bargain and Ford stock should be on your radar.

Ford Motors Company (F) Stock Will Gain 20% in Trump's First Year

Ford, which has risen just 3% over the past year, has been stuck in neutral for quite a while.

And that was even with the market rallying strongly to close out 2016. But F stock can drive much higher in the quarters ahead.

Friends in High Places

On Friday Donald Trump was sworn in as the 45th president of the United States. Trump’s pro-business and pro-American policies can have a profound effect on Ford, America’s second-largest automaker behind General Motors Company (NYSE:GM). And as for Ford stock? With some patience, investors can expect at least 20% return in F stock.

The Michigan-based automaker, which earlier this month announced a $700 million investment at it Flat Rock, MI assembly plant, has already won favor with Trump. The money Ford plans to invest was diverted from $1.6 billion Ford planned to spend on a new factory in Mexico.

Ford’s decision, it was reported, was influenced by policy goals of Trump’s, including his stance on lowering taxes and getting rid of regulations.

What motivated Ford’s $700 million investment is up for debate. Only the company knows for sure what drove its decision. What we do know is that its decision will help Donald Trump fulfill a campaign promise. And if Trump gets a win, Ford and F stock may too become winners. Indeed, growth of U.S. auto sales has slowed last year. Nonetheless, 2016 was a solid year for automakers and in particular, Ford.

Ford’s December retail sales surged 5% to 183,454 vehicles, marking the company’s strongest December since 2004. For the year, Ford sold 2.6 million vehicles — a company record and its highest in a decade. And here’s the thing: assuming Trump’s so-called protectionist policies and tougher stance on trade, Ford sales could drive even higher in 2017, as competitors such as Toyota Motor Corp (ADR) (NYSE: TM) find it tougher to thrive.

Bottom Line for Ford Stock

Ford stock is cheap and should be owned, not traded. And this was true before Donald Trump became the 45th president of the United States Friday and Trump’s inauguration makes it even more true now.

F stock closed Friday at $12.36, down 0.56%. Ford stock is priced at a forward P/E of 7.5, based on fiscal 2017 estimates of $1.63 per share. The shares would only need to reach $15 to return 20% — something I expect to happen in Trump’s first full year in office. Add in Ford’s 4.83% annual dividend yield, it makes buying Ford stock a no-brainer.

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

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