Ford [NYSE: F] continues to strengthen its competitive edge in the market through its F-Series line of trucks. According to the company CEO, Jim Hackett, the F-Series trucks have gained market share, an indicator that there is growing demand for this product line. What’s even more interesting is that, the F-Series trucks have some of the highest profit margins in the Ford product offering. Thanks to the strength of the F-Series, the company earned an extra $300 million more compared to a similar period in the last financial year.
On top of having a high flying product, Ford is investing heavily in the future of Automobiles. On the 24th of April, the company announced that it would be investing $500 million in Rivian Automotive LLC. This Michigan based startup is focused on Electric cars, and could emerge as a potential competitor to giant electric car maker Tesla. Estimates put the value of Rivian Automotive LLC at around $5 to $7 billion, meaning it is sufficiently capitalized to make it big in the long haul. Ford is also working on sharing electric car infrastructure with Volkswagen, another indicator that the company is serious about making inroads in the Electric car market.
With all these developments, it is not surprising that the company is on a rebound. In the last 52-weeks, Ford Motor Company (F) has underperformed the market. It lost 16.71% of its value, while the S&P 500 edged higher by 9.64%. However, Ford is looking up again. Looking at the charts, it has held above the 3-month 50 day moving average, which is now acting as a key support level. It also has some even firmer support on the 3-month 200-day moving average at $8.82. If it continues its upside push, its next key resistance could be at $12.15, which is the stock’s 52-week high.
One of the major factors likely to give it a push above the $12.15 (52-week high) resistance is the high profit margin that it recording with the F-Series trucks. If this product line continues its strong showing, then chances are that Ford’s profit margins in this quarter will be relatively high too, and this could boost the stock. It is also noteworthy that the company has a relatively high free cash flow, relative to most car makers. Ford has a levered free cash flow of $3.42 billion. This gives it the leeway to keep making strategic investments, further driving up its long-term earnings potential, and supporting the stock price.
With such good prospects, it is not surprising that high reputation Wall Street firms like Goldman Sachs have a positive outlook for Ford. Goldman Sachs upgraded Ford from neutral to buy, an indicator that they believe this stock could be long-term bullish. As long the F-Series keeps performing well, Ford could be a top performer in coming quarters. Besides, the U.S economy remains strong, and could help sustain consumer demand for automobiles in the near-term.