Ford stock price dynamics still show bullish
One look at a daily technical analysis chart, though, shows the cup half full and half empty for Ford. Pullbacks and sideways price movements can be signs of breakdown pause or pause for the next leg upward. This is where the fundamentals, a monthly chart and a viewpoint of the general market come in.
According to TopStocksPortfolios.com, the general market is not as overbought as some bears on CNBC tout. If one takes the "average" analyst call on the SPX of 1379 and the "average" S&P earnings forecast of $92, you can derive a multiple of 15.0.
Moreover, the median P/E multiple since 1956 on the S&P is 16.5, so certainly these pessimistic rants are at odds with bullish forecasts; meaning, although riding a wave of success since the flash crash in May of 2010, the market is not overbought; at least not yet.
On the auto industry fundamental side, though, it's important to keep the reality of the worldwide automotive marketplace in mind. In the next 40 years, for example, the global fleet of passenger cars is expected to quadruple to nearly 3 billion. China, which has overtaken the United States as the world's biggest car market. That implies China could have as many cars on its roads in 2050 as there are cars on the planet today.
Furthermore, India's fleet may multiply 50-fold. So, it's likely that new approaches to mass transit might be used there to help limit some of that growth, but there's no doubt car use is on a major upward trajectory worldwide.
Bad news is, Ford is not strong in China as compared to GM. Still, Ford’s technology has shown great strength among the competition, especially in the small car segment in America; where gasoline is expected by some to rise in 2011, especially if the dollar falls from its present level. It's new car, the Ford Fusion Hybrid, is showing up bigtime on TV ads.
For sure, Ford’s technology displays at the 2010 NAIAS and the 2010 SAE World Congress in Detroit have shown details that other companies have been negligent to share. Auto analysts are eager to see what they will show at the 2011 NAIAS.
So, aside from GM’s Volt and Nissan’s Leaf, Ford cars are in a great position fuel-economy-wise with their EcoBoost technology.
On the stock rating side, the VectorVest system shows Ford with a VST rating of 1.26. On a scale of 0-2, anything above 1.00 is considered bullish. The VST acronym represents a composite of value, safety and timing. When looked individually, Ford has a Relative Value (RV) of 1.50; a Relative Safety of 0.95; and a Relative Timing (RT) of 1.29. All are based on last Friday’s close.
Looking at a daily stock chart, though, the price dynamics of Ford shows a sideways movement since early November. However, on a monthly chart (shown below), it shows a low of 9.75 in June and a recent 52-week high in November of 17.42; meaning, the trend bias is lower left to upper right - bullish.
It’s been noted by Jim Cramer of CNBC’s Mad Money that once the autos start an upward trek they continue for very long ride. So, whether you believe the market may sell off now or next month, question is: Is Ford a buy at present levels? If so, then certainly the holiday pause in price action may be serving up the opportunity to pick up some shares.
: This author has owned Ford stock and options in the past, but at present does not hold any positions.
GM stock breaks out on low volume