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Ford (F) Raises the EV Bar: Should You Buy the Stock Now?
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Amid the changing dynamics of the auto market, it has become imperative for industry players to reorient their business models and pull out all the stops toward an electrified future. One of the legacy automakers that is hitting all the right notes in this regard is Ford (F - Free Report) . With Ford Mustang Mach-E SUV already a superhit, the U.S. auto giant is uniquely positioned to gain a competitive edge in the electric vehicle (EV) space with its upcoming launches that include zero-emissions pickup and van.
The company is indeed going all out to demonstrate its EV prowess. Especially, last week, the automaker grabbed huge eyeballs as it unveiled its ambitious electrification plans. Well, more often than not, Tesla (TSLA - Free Report) is the first name that pops into our heads when we talk about EVs or want to play this red-hot sector. However, many other auto companies (especially legacy automakers that have survived various ups and downs, and proven their mettle several times) are capitalizing well on the soaring demand for green vehicles.
Ford is certainly one of the more sought-after auto biggies likely to emerge as long-term winners in the EV race. At its investor day held last week, the company laid out future strategies under the Ford+ plan, with a deep focus on increasing profitability, exploring e-mobility future and enhancing customer experience. Ford expects an 8% adjusted profit margin before interest and taxes in 2023.
So, is it the right time for you to invest in the stock? Before going into that, let’s delve into the company’s electrification strides and other key takeaways from the recent investor day.
Ford Takes EV Game a Notch Higher
By the end of the decade, Ford anticipates 40% of its global vehicle volume to become all-electric. The company has ramped up planned EV spending to more than $30 billion (from the previous target of $25 billion) by 2025.
EV Versions of Its Hot Selling Nameplates: Mustang Mach-E — which is giving a tough competition to Tesla — is already boosting Ford’s sales. The company commenced deliveries of Mustang Mach-E in late 2020 and the vehicle got great reception from customers. Such has been the appeal of the vehicle that the company claims that 70% of Mustang Mach-E buyers are first-time Ford customers.
Ahead of its investor day, Ford unveiled the F-150 Lightning Pro — the first-ever all-electric F-Series truck designed for commercial customers. With the base price of sub-$40,000, it amassed 70,000 reservations in just a week and expects deliveries to begin next year. Designed specifically for commercial customers, F-150 Lightning Pro blends familiar Built Ford Tough power, capability and durability with a contemporary electric platform, adding new features designed to enhance productivity as well as reduce operating costs, while ensuring carbon neutrality.
E-Transit, an upcoming battery-electric version of the Transit cargo van, will hit the roads later this year. Customers can reserve the vehicle on Ford's website.
Boosting Battery Tech: Ford aims to lower battery cost by 40% by 2025 and is on track to achieve $100/kWh within the time frame. In April, Ford announced its decision to establish a new global battery center of excellence — Ford Ion Park — to accelerate the research and development of battery cell technology. The Detroit-based automaker is working toward the development of self-made EV batteries suited across its lineup of vehicles. IonBoost+ is Ford’s next-gen battery tech, ideal for large vehicles and performance products. Meanwhile, it is also developing another battery cell — IonBoost Pro — suited for commercial vehicles. Ford also raised its investment in Solid Power, an industry-leading producer of all-solid-state batteries for EVs. Last month, Ford partnered with SK Innovation to form a joint venture — BlueOvalSK — to manufacture battery cells and array modules in the United States. The deal underscores Ford’s commitment to vertically develop battery capabilities.
Ford Pro to Bolster Top Line
The company announced the creation of Ford Pro, a global vehicle services and distribution business committed to commercial and government customers. The business is aimed at increasing uptime and reducing ownership costs, thereby resulting in productivity and performance. Ford forecasts revenues from the commercial business to grow to $45 billion by 2025, up from $27 billion in 2019. The company is already going strong in this space, and targets to further boost profitability in the segment, thanks to electrification and connectivity-enabled offerings.
In March, Ford introduced FORDLiive — a new connected uptime system that is set to enhance productivity of the company’s commercial vehicles via maximization of uptime. It plans to gradually roll out FORDLiive across European markets through 2021, with the aim of serving 80% customers by exclusive uptime centers by year-end.
On Its way to Become a Tech Powerhouse
Ford is working actively to enhance connected car tech and over the air (OTA) software updates. Taking cues from Tesla, Ford is set to roll out major OTA updates to its vehicles this year. It targets to build 33 million vehicles with the capability of receiving software updates by 2028. Ford’s collaboration with tech giants including Alphabet (GOOGL - Free Report) -owned Google and Amazon (AMZN - Free Report) will speed up innovation, enable the auto biggie to deliver a superior experience for customers and modernize the business. Digitally-enabled tools like Ford Pass and Lincoln Way are making the lives of consumers smarter and easier, thereby strengthening customer relationships.
Is Ford a Good Buy Now?
Ford’s long-term prospects look positive on the back of accelerated efforts to transition to smart, connected and green vehicles, which is the need of the hour. The firm’s scalable EV architectures and connected car tech poise it for endless growth opportunities. Ford’s sales and profits are on the rebound. Rising investment in emerging technologies including EVs, self-driving vehicles and software-as-a-service capabilities is also cheered by investors. Its restructuring initiatives in the European market have been yielding results. Ford has been trading cheap, which makes it a good deal. Further, the company’s expected EPS rate of 21.8% over the next three-five years compares favorably with the industry’s 19.5%.
However, one can’t ignore the global chip concerns that the auto industry is currently battling with. Amid the acute chip shortage, Ford lowered its guidance and expects a $2.5-billion hit to earnings. The company has warned that the microchip shortfall would slash second-quarter output by 50%. Ford now anticipates losing 1.1 million units of production in 2021 due to chip concerns. What’s worse, it expects the global chip shortage issue to persist till 2022.
Having said that, these are just some near-term headwinds in the way of promising long-term expected growth of the Zacks Rank #3 (Hold) firm. So, stay invested in the stock if you already own it. Cautious investors should add the stock in their watchlist and wait for better entry points to reap handsome rewards from this auto giant. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Image: Bigstock
Ford (F) Raises the EV Bar: Should You Buy the Stock Now?
Amid the changing dynamics of the auto market, it has become imperative for industry players to reorient their business models and pull out all the stops toward an electrified future. One of the legacy automakers that is hitting all the right notes in this regard is Ford (F - Free Report) . With Ford Mustang Mach-E SUV already a superhit, the U.S. auto giant is uniquely positioned to gain a competitive edge in the electric vehicle (EV) space with its upcoming launches that include zero-emissions pickup and van.
The company is indeed going all out to demonstrate its EV prowess. Especially, last week, the automaker grabbed huge eyeballs as it unveiled its ambitious electrification plans. Well, more often than not, Tesla (TSLA - Free Report) is the first name that pops into our heads when we talk about EVs or want to play this red-hot sector. However, many other auto companies (especially legacy automakers that have survived various ups and downs, and proven their mettle several times) are capitalizing well on the soaring demand for green vehicles.
Ford is certainly one of the more sought-after auto biggies likely to emerge as long-term winners in the EV race. At its investor day held last week, the company laid out future strategies under the Ford+ plan, with a deep focus on increasing profitability, exploring e-mobility future and enhancing customer experience. Ford expects an 8% adjusted profit margin before interest and taxes in 2023.
So, is it the right time for you to invest in the stock? Before going into that, let’s delve into the company’s electrification strides and other key takeaways from the recent investor day.
Ford Takes EV Game a Notch Higher
By the end of the decade, Ford anticipates 40% of its global vehicle volume to become all-electric. The company has ramped up planned EV spending to more than $30 billion (from the previous target of $25 billion) by 2025.
EV Versions of Its Hot Selling Nameplates: Mustang Mach-E — which is giving a tough competition to Tesla — is already boosting Ford’s sales. The company commenced deliveries of Mustang Mach-E in late 2020 and the vehicle got great reception from customers. Such has been the appeal of the vehicle that the company claims that 70% of Mustang Mach-E buyers are first-time Ford customers.
Ahead of its investor day, Ford unveiled the F-150 Lightning Pro — the first-ever all-electric F-Series truck designed for commercial customers. With the base price of sub-$40,000, it amassed 70,000 reservations in just a week and expects deliveries to begin next year. Designed specifically for commercial customers, F-150 Lightning Pro blends familiar Built Ford Tough power, capability and durability with a contemporary electric platform, adding new features designed to enhance productivity as well as reduce operating costs, while ensuring carbon neutrality.
E-Transit, an upcoming battery-electric version of the Transit cargo van, will hit the roads later this year. Customers can reserve the vehicle on Ford's website.
Boosting Battery Tech: Ford aims to lower battery cost by 40% by 2025 and is on track to achieve $100/kWh within the time frame. In April, Ford announced its decision to establish a new global battery center of excellence — Ford Ion Park — to accelerate the research and development of battery cell technology. The Detroit-based automaker is working toward the development of self-made EV batteries suited across its lineup of vehicles. IonBoost+ is Ford’s next-gen battery tech, ideal for large vehicles and performance products. Meanwhile, it is also developing another battery cell — IonBoost Pro — suited for commercial vehicles. Ford also raised its investment in Solid Power, an industry-leading producer of all-solid-state batteries for EVs. Last month, Ford partnered with SK Innovation to form a joint venture — BlueOvalSK — to manufacture battery cells and array modules in the United States. The deal underscores Ford’s commitment to vertically develop battery capabilities.
Ford Pro to Bolster Top Line
The company announced the creation of Ford Pro, a global vehicle services and distribution business committed to commercial and government customers. The business is aimed at increasing uptime and reducing ownership costs, thereby resulting in productivity and performance. Ford forecasts revenues from the commercial business to grow to $45 billion by 2025, up from $27 billion in 2019. The company is already going strong in this space, and targets to further boost profitability in the segment, thanks to electrification and connectivity-enabled offerings.
In March, Ford introduced FORDLiive — a new connected uptime system that is set to enhance productivity of the company’s commercial vehicles via maximization of uptime. It plans to gradually roll out FORDLiive across European markets through 2021, with the aim of serving 80% customers by exclusive uptime centers by year-end.
On Its way to Become a Tech Powerhouse
Ford is working actively to enhance connected car tech and over the air (OTA) software updates. Taking cues from Tesla, Ford is set to roll out major OTA updates to its vehicles this year. It targets to build 33 million vehicles with the capability of receiving software updates by 2028. Ford’s collaboration with tech giants including Alphabet (GOOGL - Free Report) -owned Google and Amazon (AMZN - Free Report) will speed up innovation, enable the auto biggie to deliver a superior experience for customers and modernize the business. Digitally-enabled tools like Ford Pass and Lincoln Way are making the lives of consumers smarter and easier, thereby strengthening customer relationships.
Is Ford a Good Buy Now?
Ford’s long-term prospects look positive on the back of accelerated efforts to transition to smart, connected and green vehicles, which is the need of the hour. The firm’s scalable EV architectures and connected car tech poise it for endless growth opportunities. Ford’s sales and profits are on the rebound. Rising investment in emerging technologies including EVs, self-driving vehicles and software-as-a-service capabilities is also cheered by investors. Its restructuring initiatives in the European market have been yielding results. Ford has been trading cheap, which makes it a good deal. Further, the company’s expected EPS rate of 21.8% over the next three-five years compares favorably with the industry’s 19.5%.
However, one can’t ignore the global chip concerns that the auto industry is currently battling with. Amid the acute chip shortage, Ford lowered its guidance and expects a $2.5-billion hit to earnings. The company has warned that the microchip shortfall would slash second-quarter output by 50%. Ford now anticipates losing 1.1 million units of production in 2021 due to chip concerns. What’s worse, it expects the global chip shortage issue to persist till 2022.
Having said that, these are just some near-term headwinds in the way of promising long-term expected growth of the Zacks Rank #3 (Hold) firm. So, stay invested in the stock if you already own it. Cautious investors should add the stock in their watchlist and wait for better entry points to reap handsome rewards from this auto giant. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%.
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
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