F Stock – Finished Or Real Deal?

We’ve all heard the fun acronyms made out of FORD – Found On Road Dead or Fix Or Repair Daily.  However, I now believe this old image may be the worst part Ford has going for them.  In the Wall Street Journal yesterday they showed Ford as lost the least percentage of sales of any of the major automakers, including the business darling, Toyota.  While certainly too late Ford excepted it’s fate long before Chrysler or GM and started to make changes like selling lower margin cars and improving quality. 

This isn’t to say the the FORD (stock: F) is out of the woods or financially beautiful.  It has nearly 157 billion in debt - assuming 6% interest that’s about $785 million per month in interest.  However, they have $27 billion in cash so they should be able to hold out a while longer.  Which makes sense as they were the only one of the BIG 3 automakers to only ask for a line of credit not a hand me out deal.   GM says it needs 4 billion just to survive the month.  If Bush holds true to his word of a veto on any auto bailout then GM and likely Chrysler will likely fall which leaves a huge amount of market for Ford to capture.

I had the pleasure of having coffee with Dr. Surya Pathak of the University of Washington yesterday, a specialist in business networks.  Naturally the conversation turned to this Auto bailout issue where he pointed out his dissertation from a few years back noting the upcoming failure of the US auto industry due to the legislative restrictions on foreign cars placed in the 1970′s to help the US automakers, hindering the progression of their companies while accelerating the business systems of Toyota and Honda.  A further bailout would only seal the fate of the bankruptcy of the US auto industry, while allowing them to collapse now they could still be salvaged.  I believe this is the future and Ford will be the winner.

F Stock Technicals:

This recent bump up off the 52 week low is out of steam and the 80 level of the RSI has shown to be a point of resistance.  However, if the 50 day Moving Average proves to be support we should see another decent run up as long as the governement doesn’t do something crazy like bail out GM and not Ford.  If you buy into the stock now set a stop loss just under the 50 day MA.


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2 Responses to “F Stock – Finished Or Real Deal?”

  1. Hi. I read a few of your other posts and wanted to know if you would be interested in exchanging blogroll links?

  2. [...] as I don’t think all the car companies can be allowed to fall, as as the other two do collapse Ford’s market share will increase to the point it will be solvent [...]