Is Ford Stock A Buy After Doubling Production Of The F-150 EV?

Ford Motor (F) began the new decade with optimism as it emerged from a fundamental corporate redesign to compete in the era of smart vehicles and clean energy. The automaker is investing heavily in new technologies to keep pace with competitors in the markets for autonomous vehicles, ride sharing and electric cars. But is Ford stock a buy now?

The unveiling of the Mustang Mach-E in November 2019 was a key milestone in the company’s pivot toward what it called “the digital future.” The Ford Mustang Mach-E, an all-electric crossover, made its commercial debut in the U.S. in late 2020. Ford is beginning production of the Mach-E, a competitor to the Tesla (TSLA) Model Y, in China as well. And Ford didn’t stop at electrification with a crossover — it now has an electric version of the F-150 coming in early 2022.

Ford’s investment in electrification helped push shares to a 140% gain in 2021. That led to Ford surpassing General Motors (GM) in market cap for the first time in five years. But where does Ford stand now? If you’re thinking about buying shares, it’s key to analyze the fundamental and technical picture first.

Ford To Double Electric F-150 Lightning Production

Ford stock jumped roughly 11% on Jan. 4 after the automaker announced it would beef up production of the all-electric F-150 Lightning. Ford plans to double its annual output of the popular model to 150,000 vehicles per year by 2023. For cited “unprecedented consumer interest” for the ramp up.

“With nearly 200,000 reservations, our teams are working hard and creatively to break production constraints to get more F-150 Lightning trucks into the hands of our customers,” said Kumar Galhotra, who heads the Americas & International Markets Group.

Ford will plans to release reservation slots to purchase the 2022 all-electric F-150 Lightning to consumers in waves. The first batch of invitations is expected to go out on Thursday.

Delivers First Electric Mustangs In China

The first deliveries of the Mustang Mach-E in China helped lift Ford stock to a 3% gain on Dec. 27. Earlier in December, Ford announced plans to beef up its output of the popular SUV. In addition to its Asia production, the automaker plans to produce more than 200,000 units per year by 2023 for North America and Europe. That’s up from 50,000 electric crossovers in 2021.

Ford stock shot up roughly 10% on Dec. 10 on that news as investors and consumers favor the automaker’s EV shift. On Dec. 9, the automaker had to close reservations for its F-150 Lightning electric truck because of overwhelming demand. The company is also reportedly delaying the launch of its electric Explorer SUV model until 2024 to focus on Mach-E production.

Ford November Sales Up Month-Over-Month

Ford’s monthly auto sales continued to climb in November as chip woes start to ease. Overall U.S. sales came in at 158,793 vehicles, up 6% vs. last year. SUV sales hit their highest October levels in 21 years, according to the automaker. SUV retail sales were up 21% vs. a year ago, hitting a new monthly record on the strength of the popular Bronco model. Ford remained the top-selling U.S. automaker for the third month in a row.

EV sales continued to break records for the Detroit carmaker. Total EV sales hit 11,116, representing a year-over-year increase of 156%. That sales number grew at a clip three times faster than the overall electric-vehicle segment.

Cancels EV Plans With Rivian

Ford announced on Nov. 19 it’s dropping plans to jointly produce a vehicle with EV maker Rivian (RIVN). Both automakers will instead focus on developing their own electric-vehicle projects.

Despite the change of plans, Ford remains an investor in the hot EV startup. Ford invested roughly half-a-billion dollars in the Irvine-based EV company in 2019. That deal generated a financial windfall for Ford after the blockbuster Rivian IPO debut on Nov. 10. But the Detroit automaker has also pivoted focus to its own EV lineup since inking that agreement.

Ford Partners With Chipmaker To Boost Supply

Ford has entered the chipmaking business. The automaker on Nov. 18 announced a partnership with U.S.-based GlobalFoundries (GFS) to produce semiconductors. The move comes as more carmakers look to gain control over an erratic chip supply that has hamstrung the auto industry over the course of the pandemic.

Details have yet to emerge on the Ford-GlobalFoundries agreement. Rival GM is also considering collaborating with semiconductor manufacturers to bring more chipmaking back to U.S. soil.

Ford Stock Earnings

Ford blew away estimates in its Q3 earnings report on Oct. 27. The automaker recorded adjusted earnings of 51 cents per share, almost doubling Wall Street projections. Revenue totals clocked in at $35.7 billion. That number was down moderately from the same quarter a year ago due to ongoing chip shortages affecting the auto industry.

Executives also raised Ford’s adjusted EBIT to between $10.5 billion and $11.5 billion for the full year.

Ford Stock Fundamental Analysis

To determine whether Ford stock is a buy now, fundamental and technical analysis is key.

The IBD Stock Checkup tool shows Ford stock has an IBD Composite Rating of 87 out of a best-possible 99. The rating means Ford stock ranks relatively well vs. all stocks, but not outstanding, in terms of the most important fundamental and technical stock-picking criteria.

Ford stock has an EPS Rating of 37 out of 99; the rating compares quarterly and annual earnings-per-share growth with all other stocks. Ford has a spotty earnings track record, with many quarters of earnings declines over the past decade. But forward-looking estimates are pointing to growth.

The rankings place the carmaker in the No. 6 spot vs. its automotive industry peers. IBD’s automaker group is ranked a powerful No. 2 out of the 197 industry groups tracked by IBD. In general, it’s ideal to focus on top stocks in the top quartile of IBD’s groups. The automaker group has improved from a near-worst ranking just months ago to join the top 15.

Ford Stock Technical Analysis

Ford stock started the new year off strong after notching a 140% gain in 2021. Shares rose solidly on Jan. 3 as competitor Tesla reported stronger-than-expected delivery numbers. That news lifted a number of EV stocks. The move also presented an opportunity for investors to add to their existing positions in Ford stock. Shares jumped higher on Jan. 4 as the automaker announced plans to double production of the all-electric F-150.

Prior to that gain, Ford stock powered out of a cup base last year with a strong earnings gap-up on Oct. 28. Shares shot up as much as 13% before settling into the lower range of the price bar. Still, Ford ended up gaining 8.7% on that day, with heavy volume behind the move. With the stock extending its gains since, shares are now well extended from that cup base buy zone.

In fact, shares hit the 20%-25% profit-taking zone and triggered the eight-week hold rule in November 2021. Such powerful moves tell you the stock has a big chance to become an outstanding winner and that it deserves more leeway.

Ford stock has largely moved sideways since hitting that profit-taking zone in early November. Ford made another powerful move in early December after the automaker announced plans to triple the output of its popular electric Mustang. Ford stock moved higher later that month after the first deliveries of the Mustang Mach-E arrived in China.

Consider Ford’s Relative Strength

Ford’s relative strength line — which measures a stock’s price performance vs. the S&P 500 — is near all-time highs.

IBD’s research shows the importance of focusing on stocks outperforming the market.

Ford Stock: A Buy Now?

On a monthly chart, Ford stock is breaking above its long-term downtrend going back to 1999. Looking at the weekly chart, shares have made a big move off 2020 lows. Ford stock has made a big run since reporting earnings.

Bottom line: Ford stock is now extended from a buy zone. A move above the 21.59 price level was an opportunity for existing investors with a lot of conviction to add to their positions. A strong gain on Jan. 4 sent Ford stock more than 10% above the 10-week line. A decisive close below the 10-week line on a weekly basis would be a signal to sell those add-on shares.

Though Ford stock triggered the eight-week hold rule on Nov. 8, investors who bought at the 16.55 breakout could have opted to take partial profits as shares hit the 20%-to-25% profit zone.

To find the best stocks to buy and watch, check out IBD’s Stock Lists page. More stock ideas can be found on our Leaderboard and MarketSmith platforms.

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