Not too late to join the party at Ford
Sometimes you can see a good investment but sit on the sideline trying to make up your mind too long. When I began looking for an addition to my S&P 500 portfolio I screened on Barchart for the S&P 500 companies with the highest relative price strength and Ford ( F ) came up on the top of the list. At first I was a little skeptical because I'd watched it run on up and in the back of my mind thought it might have had its run but the numbers tell me otherwise.
Ford seems to have a good solid plan to take advantage of the recovery and also seems to be at the center of the Buy American ideas that appear to be sweeping the country. The forecast for survival is better than the prospects for GM or Chrysler for those who wonder if the company will be around to honor their warranties. They are producing the products that the American public likes. It has the auto market covered with 4 major divisions: Auto manufacturing, automotive systems, auto financing and truck and auto leasing through it's Hertz division.
The stock has had price appreciation in 12 of the last 20 trading sessions and is 4 for the last 5. The price appreciation in the last 65 days of 76.06% gives me butterflies. The stock has a buy signal on 12 of the 13 technical indicators on Barchart for an overall buy rating of 96%
There are 15 Wall Street analysts following the company and although they aren't predicting sky rocket sales they are looking for a 15% per year EPS growth for the next 5 years. Short interests are falling from a high last year at 292 million to around 140 million at year end.
Other sites like the stock too. Wall Street Survivor readers give the stock a 5/5 Survivor Sentiment and over on Motley Fool the CAPS members vote 5536 to 2496 that the stock will out perform the market. The All Stars are more positive with a vote of 1313 to 387.
The stock does meet my normal criteria:
1 - Price appreciation on better than 50% of the recent trading sessions
2 - A Wall Street following that predicts increased sales and earnings
3 - A falling short interest
4 - Confirmation from other popular sites that I appear to be on the right side of the stock.
Recommendation: The auto industry will be in the center of our recovery and this is the most successful American auto company. If you're looking to add to your foundation portfolio of S&P 500 companies try to buy Ford below 12 and put a protective stop loss in no lower that 9. Move it up as the stock appreciates.
Disclosure: No positions in Ford at the time of publication.
Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com.