Is Ford’s Stock Still A Good Buy?

With shares of Ford (NYSE:F) trading at around $11.53 is F an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Ford’s stock has seen its ups and downs over the past year. This stock tends to follow what’s taking place in the overall economy. If there are reports of improvement in real estate and employment, then Ford’s stock improves. This is simply because an automobile is a large purchase and the consumer needs to be strong. Since our economy has been so unpredictable over the past year, so has Ford’s stock. 

It’s clearly evident that we’re living in a time where the Federal Reserve finds creative ways to prop up the stock market, which has a major effect on everything. Unfortunately, the end game is not good. The rally we have seen over the past few years is an artificial one, and that will eventually come to an end. This, in turn, won’t bode well for Ford. That said, it’s very possible that this artificial run continues for another year, possibly more. If that’s the case, then Ford is a good investment. Let’s take a look at some other factors to get a better read on the situation.

E = Equity to Debt Ratio is High

Ford has a debt-to-equity ratio of 5.33. This causes some concern. Ford also has $35.54 in cash and $100.6 billion in long-term debt. This is another unhealthy number. On the other hand, Ford has over $9 billion in operating cash flow.  

T = Technicals on the Stock Chart Are Impressive Over The Past Few Months

Ford’s stock went on a tear in 2009, and that’s what seems to remain in most investor’s minds, but over the past three years, Ford has underperformed the S&P 500.

Over the past month, Ford is up 9.12% while the S&P 500 is down .15%. That’s impressive, but let’s take a look at the bigger picture. Year-to-date, Ford is up 6.51% while the S&P 500 is up 14.43%. Over the past calendar year, Ford is up 14.72% while the S&P 500 is up 20.94%. When you look at three-year returns, Ford is…

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