Sometimes, stock investing can be pretty simple. In the case of Ford (NYSE:F) stock, it can’t get much simpler than support and resistance. In the best case, F stock looks to be facing levels of resistance just about 4% above current levels.
However, on the other hand, Ford is showing that is has downside support at prices 20%-30% below current the current F stock price.
Analysts Have a Negative View of F Shares
Since Labor Day, two analysts have revised their 2019 earnings estimates lower. And analysts aren’t expecting 2020 to be any better with growth down 0.9%.
Analysts are also not optimistic about the upcoming earnings report. Expectations are for the company to report a decline in revenue and earnings. In fact, the best the company can hope for is that it posts a lower loss than expected.
Is There a Case for Ford Stock?
From a historical perspective, owning Ford has been good for investors. A shareholder that bought shares in 1972 would have made 31 times their initial investment. Much of that is due to the company’s dividend. However, even dividend investors have had a wild ride since Ford issued its first dividend in 1956. The company has cut its dividend four times and stopped paying dividends altogether twice.
But if you’re looking for a reason to own Ford stock, I’ll offer this. According to Robintrack, which tracks the most popular stocks on Robinhood, Ford is the third most widely held stock on the app. When asked for reasons for owning F stock, investors cited a low price-earnings ratio, the potential upside from self-driving initiatives, and its dividend yield.
Ford Is Betting Big on Electric Vehicles
Industry rumors say that Ford will begin production on their first-ever long-range BEV in 2020. This “Mustang-inspired” high-performance crossover SUV is expected to debut at November’s Los Angeles Auto Show.
To help spur sales of the BEV, Ford is introducing an electric-vehicle network with over 12,000 charging stations and more than 35,000 charge plugs in North America. The company also said they will partner with Amazon (NASDAQ:AMZN) Home Services to offer installation of home charging setups.
It’s an approach that is similar to what Tesla (NASDAQ:TSLA) is currently attempting with some success. The concern about available charging stations is one of the key barriers to entry for many prospective electric vehicle owners.
“Among people who already own or want to purchase electric vehicles and plug-in hybrids, 48 percent say that a lack of charging stations is one of their main concerns,” said Ted Cannis, Ford director of global electrification.
However, Ford has miles to go before consumers and investors will perceive it to be the leader in electric or semi-autonomous vehicles.
F stock Is a Pass for Me
The only case I could make to buy shares of Ford stock would be to capture the dividend. And with a 6.6% yield, that’s nothing for value-oriented investors to ignore. But in terms of growth, I’m not seeing a strong case for F stock.
Ford stock is up almost 17% in 2019. It’s also up nearly 10% on a year-over-year basis. That’s nothing to ignore for a stock that has seen better days. In fact, F’s performance for this year is better than any publicly traded U.S. automaker.
But this is a case of what comes down must come up. Ford stock was crushed in 2018, losing 34% and short-term trends are not in the company’s favor. Since 2014, shares have been cut in half. In the last three years, the highest the stock has risen is $12.49. That would be a 34% increase from the current F stock price. However, for Ford to move significantly higher would mean bucking some significant trends.
My sense is that if Ford shares are going to make a move, there will be ample time for investors to catch the wave. But that could be years down the road. Until then, if I’m a growth investor, I have to look in other areas. Ford stock just doesn’t look like it has enough juice, regardless of its commitment to electric cars.
As of this writing, Chris Markoch did not have a position in any of the aforementioned securities.
