Buy Ford: North America To Drive The Stock Higher

Ford (F) reported its earnings yesterday before the market opened. It managed to top earnings estimate but missed revenue expectations, largely due to the continuing problems in the European auto market. The market has developed a new interest in the recent European turnaround strategy announced by Ford's CEO Alan Mulally. Other highlights of the earnings release were a record profit margin of 12% in North America, improved sales in Asia, Africa and China, and the success story of the F-Series truck, which alone accounts for 90% of the total global auto profits made by Ford.

Ford reported its 14th consecutive profitable quarter. The most attractive news for investors has been the European turnaround plan that is expected to bring significant improvement through variable cost reductions, reduction in structural costs and an aggressive pull-forward of European launches. The stock is trading at a cheap valuation of 7x. The stock also pays a dividend yield of 1.93%. The margins in North America are on a rise. Given that the European plan goes according to the company's expectations and it keeps growing in North American market, the stock is expected to go high. Read more