100-Percent Electric, Hybrid, Plug-In Hybrid, and Gas-Powered Cars!
There are some great reasons to invest your hard-earned money and savings in Ford Motor Company (NYSE ticker: F). These include the long-awaited return of their dividend, their reducing debt levels, domestic and international growth prospects, and the company’s increased credit rating (and the move back to investment grade). The other interesting reason is Ford’s commitment to innovation in green technologies and electric vehicles including its Ford Focus line of 100 percent electric, hybrid, plug-in hybrid, and gas-powered models. This might just be the time to get back into Ford -- the cars and the stock.
Whether you buy a Ford car or truck with models like Evos, Escape, Fusion, Mondeo, Taurus, Edge, Fiesta, Explorer, Lightning, or the iconic F150 or Mustang, investing in Ford in 2012 might be just as smart. The company now sells about thirteen millions vehicles per year, and this number could grow significantly if they can take market share from other global manufacturers. As Ford invests more around the world (like throughout China, and in Gujurat, India, and elsewhere) Its recovery is still somewhat undervalued (current and forward price to earnings ratio under six as of this writing!), and without a dividend many individual and institutional investors have stayed away. With a dividend tied to increased credit ratings, according to Ford’s Chief Financial Officer, this stock could become favorable again overnight. It might be a good feeling to own it before everyone else does and drives the price up. And the best thing about a company sharing its profits with shareholders in the form of dividends is that you get paid to wait for the stock price to appreciate. Your “total return” is a combination of the growth of Ford and its stock, and the income you have received as quarterly dividends.
OTHER STOCKS IN GREEN AUTO INNOVATION
Sure you could buy innovative, flashy fast-money stocks like very cool electric car maker Tesla (NASDAQ ticker: TSLA), the brainchild of entrepreneur and Paypal co-founder Elon Musk. Or perhaps chase the electric battery visions with China BAK Battery Inc (NASDAQ ticker: CBAK), or A123 Systems, Inc (NASDAQ ticker: AONE). Or maybe you’re interested in the possibilities of liquified natural gas-powered vehicles and can investigate Westport Innovations Inc (NASDAQ ticker: WPRT), Royal Dutch Shell (NYSE ticker: RDS-A), Chesapeake Energy Corporation (NYSE ticker: CHK) or even the T. Boone Pickens fueling company Clean Energy Fuels Corporation (NASDAQ: CLNE). Even General Electric (NYSE ticker: GE) as a huge multi-national diversified conglomerate, green innovator, and frequent acquirer, could end up being important in many of these areas.
The problem is that many of these companies are small, speculative and not yet profitable. Shell and Chesapeake are definitely large solid companies but even with new innovations, their direct transportation exposure is a small part of what they do -- and they are not a pure play on the auto sector.
So you could choose Toyota Motor Corporation ADR (NYSE ticker: TM) which with their popular Prius is clearly the front-runner for green innovation. But even with the aftereffects of natural disaster in Japan, that company still seems expensive. Or perhaps choose Japan’s Nissan Motor Company Ltd ADR (OTC ticker: NSANY) with their 100 percent electric Leaf series model and their innovations.
FORD AND THE AMERICAN ECONOMY
What is interesting about Ford Motors is that as the American economy and job market improves over the next few years, so will our domestic auto market, and they should benefit. As more Americans choose green and energy-efficient products and make sustainable choices with their purchasing dollars, Ford and their Focus hybrid and electric series (and future models) will increase sales and revenues. As the only major
American auto company that did take a bailout in 2008-09, they still have union issues related to their perceived strength. But even this could resolve itself in Ford’s favor as UAW members and union officials work more cooperatively with domestic companies to stay competitive with foreign automakers like Volkswagen AG, BMW, Hyundai, Toyota, and others.
Ford and Toyota also recently announced collaborative product development work on a “hybrid system for trucks.” It is an interesting corporate model of working together for the benefit of consumers and customers, but also remaining competitors. They also intend to work together developing more vehicle "information and entertainment systems" - essentially a range of internet and network data for the driver and passengers.
HOW TO BUY FORD STOCK?
Through your full-service or discount broker you can buy shares in Ford for your portfolio. It often makes sense as CNBC Mad Money-host and former hedge fund manager Jim Cramer recommends, to buy stock in lots (possibly thirds or quarters). That way if you initially buy the stock and the price goes down, you get the benefit of dollar-cost averaging. If you plan to make Ford a long-term investment, it is also great to purchase the shares in a retirement account (tax deferred) or better yet in a Roth IRA account. That way the long-term gains, and investment income from dividends are tax sheltered, or in the case of the Roth, tax-free. This way you can take full advantage of your compounding!
If you want to buy Ford stock monthly (for at least $50 (US) or more), you can buy the stock through the company’s Direct Stock Purchase Plan and Dividend Reinvestment Plan (DSPP and DRIP), handled by their transfer agent. The stock will be held in your name directly and the plan offers fractional share purchases after their modest transaction fees (they even have a ROTH DRIP plan).
Some believe that with the volatility of the global markets, day trading, and not “buy and hold” long-term investing, is the only way to be involved in stocks. Remember to do your own research on Ford Motor Company and any other stock, ETF, or mutual fund investment you are considering owning. If you follow guru investor strategies that buying an individual stock should be approached with the same seriousness as if you were a billionaire buying the entire corporation, company, or franchise -- you should do well. Be sure to read everything you can (including annual reports), and develop your own investing ideas, and then consult your own advisors, and investment professionals before committing any risk capital. It always pays to be a well-informed investor.
DISCLOSURE: The author currently holds shares of Ford (F) in a long-term ROTH IRA account.