By on December 26, 2007

f.JPGUSA Today's financial markets repoter Matt Krantz gives Ford a Boxing Day black eye, warning his readers not to touch FoMoCo's stock with a proverbial ten foot pole. Krantz proffers his prognostication of doom based on four criteria. In the area of risk versus reward, the McPaper's market maven figures "you're taking twice the risk to get a shot at a smaller return." Looking at discounted cash flow, Krantz says if "you're looking for a bargain, you're not getting it with Ford at these prices." Based on the stock's current value compared to historic range, Ford is in the "sell" range, and "that's not good, either." Finally, Krantz rates Ford's overall financial health on a scale from 1 (healthy) to 5 (mortally wounded). The Blue Oval Boyz clock-in at… 4.3. Krantz leaves no words minced. "You can do much better… there's no reason to think Ford stock is worth taking a chance on yet." Incidentally, he also warns "General Motors' stock hasn't been much better" this year, in case you were considering an American automotive alternative.

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10 Comments on “USA Today: Don’t Buy Ford Stock...”


  • avatar
    justjim

    There’s not many of us buying their cars and trucks… I guess it only goes to say that there are even less of us interested in investing in their company… just a thought.

  • avatar
    GS650G

    Hopefully the aftermarket will provide enough parts for the poor souls who own one of their products. Ditto for cry-sler.

  • avatar
    KatiePuckrik

    I don’t get? Why is Ford stock so untouchable? I mean, they’ve started to get their corporate culture under conrol, they’re culling redundant brands and start to have something resembling a vision. The only problem now is making cars that people want to buy. But Mr Mullaly has stated that this is the priority for 2008.

    I think Ford is in better shape than most of Detroit.

  • avatar
    Matthew Danda

    I sold my Ford stock after I bought a Fusion and realized it was a darn good car. My logic: if building a good car can’t get them out of the red, then what kind of miracle do they need to survive?

    BTW: I bought Ford stock at $7 in 2005 and sold at $9 in 2007. Not a fun experience but it could have been worse.

  • avatar

    “I don’t get? Why is Ford stock so untouchable?”

    Because you’ll lose ALL your money when they go under. Its not just the cars and the corporate culture. Its the numbers, they just owe too much money

  • avatar
    Steven Lang

    Exactly. They have too much of a debt load at this point. However the Fusion is a very good car… but the level of anti-Ford/anti-‘American’ car hubris out there is doing a big number on the blue oval. They let too many models languish in long product cycles and the products were largely sub-standard in terms of overall long-term quality. The overall blandness of most of their offerings didn’t help matters either.

  • avatar

    There will be a time to buy, but the worst is yet to come. It may be too late for those new 2009 models we occasionally hear about.

    If there’s still a FoMoCo in 2010, it’ll be the company to invest in. Provided the post bankruptcy management really kicks out the jams.

  • avatar
    jthorner

    “I mean, they’ve started to get their corporate culture under conrol, they’re culling redundant brands and start to have something resembling a vision. The only problem now is making cars that people want to buy.”

    That only problem is the one problem which matters, and there is no indication that Ford USA has a clue about solving the problem. Over a decade of focusing on the easy money from F150 and Expedition sales left them intellectually bankrupt, and the new guy isn’t helping that in the least.

    The best indication of this is that Ford’s top designer has been spending his time jetting around the world preaching to the designers that it is time for one-look-everywhere. All models, all markets are supposed to speak from the same “design language”. That is NOT going to fix Job 1.

    Meanwhile Ford heirs continue to suckle at the udders of the family firm. I feel bad for the many employees who are being damaged by the company’s mismanagement …. and I look forward to the day when the Ford family stock is worth zero.

  • avatar
    LenS

    “I don’t get? Why is Ford stock so untouchable?”

    Because their stock is too high still. When you take a risk on a company turning around, you still only buy if the stock is historically low. That way you get a great profit to match the great risk that you’re taking. But at the current price, even if it turns around, it won’t go high enough to justify the risk you take. You could have earned the same profit with a much less risky stock. Earning 10% profit when you might have lost 100% is not a good investment strategy — unless you like losing money.

  • avatar
    montyh

    i am not an investor who knows debt ratios or stuff likethat but if you ever saw “Working Girl” you will know that sometimes just good old common sense can tell you things that all the ratios don’t
    Well, I know Ford has many problems, but I am a car fanatic- I attend every auto show. I have owned Mercedes, BMW, Jaguars, and I recently bought a new Lincoln MKS. -BEST car I have ever owned. They are coming out with the MKT crossover-drop dead gorgeous
    Ford currently has the STATE ofthe Art Navigation system developed with Microsoft that they are going to put in all their cars as an option. Everyone that I show it to is amazed. Ford is coming out with the NEW Taurus model which will sell like hotcakes-it is stunningly good looking and high quality interiors . They are introducing the Mondeo that has sold in Europe,and the Fusion Hybrid will get the best mileage for ANY hybrid produced. SO my gut feeling is that if Ford survives and I think it will- my guess is that in afew years you will all wish you had bought Ford stock- I am a car snob, and I can tell you they are going to put out some hot selling cars soon. Once the public sees these new models they will be packing the showrooms. Three years ago I would not have even stopped in a Ford or Lincoln dealer- all that has changed


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