October U.S. auto sales increased 7.5%, the best they have been since 2007, but the 5 key players, including the “Big Three” in North America and 2 of the world’s largest car manufacturers, have had mixed results. Two major factors negatively affecting sales this month are the floods in Thailand cutting off supply chains for many manufacturers and the ongoing debt crisis in Europe. On a macro scale, weak consumer confidence and high unemployment have deflated stock prices, making now a good time to buy. The stock prices of all five companies are near their 52 week lows despite the high sales. A likely cause is the slower than expected economic recovery with the Federal Reserve not expected to take action until early next year.
Ford (F): Now positioned #1 in U.S. sales, Ford stands a good chance to outperform its competitors. Shares are trading at $11.17 in its 52-week trading range of $9.05 to $18.97at the time of writing. At the current trading price Ford is capitalized at $42.48 billion with earnings per share for the last year of 1.74 and a price to earnings ratio of 6.47.
Ford reported a 6% increase in year-to-year sales for the month of October, with utilities sales leading the way increasing 38% and strong truck sales up 8%. Signaling a trend towards Ford’s next generation of fuel-efficient products, 40% of Ford F-150 buyers opted for the new EcoBoost engines, selling 15,000 in October. The 2012 line-up of Ford vehicles is also relatively risk-free, focusing on fuel-efficient redesigns of current models rather than investing in completely new lines.To continue reading, click here