Is Ford stock a good buy for investors?

Ford Motor is one of the few US publicly traded auto stocks with attractive returns this year. With a 17% year-to-date gain, the stock has outperformed most of its peers. This year, General Motors stock has returned 7%, while Tesla stock has been flat. Toyota Motor has gained the most, rising 23.5%.

This year, Ford stock has also outperformed the First Trust Nasdaq Global Auto Index ETF (CARZ), which has gained 7.1%. Ford comprises about 7.1% of the fund. However, Ford has underperformed the Dow Jones and S&P 500, which are up 18.5% and 24.2% this year, respectively. 

Near-term prospects for Ford stock

Although Ford stock has seen a decent upswing this year, its short-term prospects don’t seem rosy. The auto industry is grappling with economic slowdown concerns and ongoing US-China trade tensions, which are dragging down its sales across key regions.

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Auto stocks don’t do well amid such macroeconomic concerns. Consumers tend to avoid big-ticket purchases when the economy slows, reducing demand for automobiles and impacting auto manufacturers’ sales and profits. 

From January to November, US light commercial vehicle sales fell 0.8% YoY (year-over-year) to 15.51 million units, according to MarkLines. The decline was mainly due to soft demand for passenger cars. Passenger car sales fell 9.8%, while pickup truck and SUV sales rose 3.4%. 

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Furthermore, Ford’s vehicle sales in China, the world’s second-biggest market after the US, have continued to fall. This year, its vehicle sales in China fell 30% in Q3, 21.7% in Q2, and 35.8% in Q1. Soft demand and the prolonged US-China trade war are hampering Ford’s sales in the country. 

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Is Ford stock a long-term bet?

Ford stock could be an interesting choice for long-term investment purposes. It could get a significant boost if the US-China trade war is resolved. And considering recent developments, we believe that could happen by the first half of 2020. A trade deal would boost corporate and consumer confidence, lifting economic activity worldwide. Ford would surely benefit.

Furthermore, Ford is trying to transform its Chinese business and revive sales through its ambitious China 2.0 strategy. Under the strategy, the company plans to launch over 30 new models in the country by 2021, with one-third being electric vehicles. 

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View more information: https://marketrealist.com/2019/12/ford-stock-should-investors-buy-it-right-now/

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