- Ford (F) stock has strong, positive catalysts, including its well-positioned electric vehicle and robotaxi businesses.
- In the shorter term, Ford will likely be hurt by the shift of consumer spending to services from goods and by very high gasoline prices.
- For long-term investors, the valuation of F stock is too cheap to pass up.
Ford (NYSE:F) stock has both powerful, positive catalysts and strong, negative catalysts. So the shares’ overall outlook is mixed at this point.
But given the tiny valuation of F stock and the progress of Ford’s subsidiary’s in autonomous driving, I believe that the name is nevertheless worth buying.
Powerful, Positive Catalysts for Ford Stock
The reboot of Ford’s Bronco has been very popular among consumers, while the company’s upcoming electric pickup, the F-150 Lightning has gotten very strong reviews. For example, Car and Driver called the EV “quick and capable” and noted that the F150’s brand is stronger than than of GM’s (NYSE:GM) Hummer EV and Rivian’s (NASDAQ:RIVN) R1T. Meanwhile, the automaker’s Mustang Mach E has reportedly become “America’s second-best-selling electric SUV.”
And on the autonomous-driving front, Ford’s subsidiary, Argo AI, recently began “testing its fully driverless vehicles in Miami, Florida, and Austin, Texas.” As Argo AI gets closer to launching a robotaxi service, the unit’s value is likely to have a greater, positive impact on the price of F stock. Indeed, in light of the tremendous profits that robotaxis are likely to generate, Argo AI will probably greatly increase the value of Ford’s shares.
Strong, Negative Catalysts for Ford
On the other hand, consumers’ rapid shift from goods to services does not bode well for Ford and F stock. Another factor that’s likely to take a significant toll on the company’s auto sales and financial results is the ever-increasing price of gasoline.
Given these points, it’s not at all surprising that the unit sales of Ford’s popular F Series trucks tumbled 22% year-over-year in April and have sunk nearly 30% so far this year versus the same period in 2021. Likewise, the unit sales of the Ford Explorer, an SUV, sank 23% YOY in April and 31% YOY so far in 2022.
A Bargain-Basement Valuation
The forward price-to-earnings ratio of F stock is just 6.4x and its trailing price-to-sales ratio is a tiny 0.4x. Considering that Ford looks poised to be a leader in both EVs and robotaxis, those valuations are simply too good to pass up for long-term investors. The name is particularly well-suited for long-term, growth-at-a-reasonable price investors.
Moreover, Ford, like other electric vehicle makers, may very well benefit from selling many monthly subscriptions to millions of its customers.
On the date of publication, Larry Ramer was long RIVN stock.