A Big Upgrade for Ford

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After spending more than a year at a less-than-impressive two-star rank, Ford (NYSE: F  ) has impressed enough top-performing members of our 165,000-strong Motley Fool CAPS community to climb up to a more palatable three stars. A total of 9,598 members have given their opinion on the auto maker, with many of them offering analysis and commentary explaining the recent optimism.

CAPS members like the progress that Ford has made in working its way through the financial crisis and believe it's on the right track for more profits. The company reported better-than-expected second-quarter earnings with profits in every geographic region, and even forecasts a profitable 2010 with a further increase in 2011. Along with U.S. peers General Motors and Chrysler, Ford started the third quarter with positive U.S. July sales gains, setting it apart from the declines at Japanese rivals Toyota (NYSE: TM  ) and Honda (NYSE: HMC  ) . July sales also rose more than four-fold in India where all-time-high car sales helped boost sales for Tata Motors (NYSE: TTM  ) , leaving investors bullish on Ford's plans to expand in India and other markets like China and Japan.

The Detroit carmaker also significantly reduced its debt in the quarter and expects to continue paying down more, which, along with its strong profits, earned it an upgraded credit rating from both Standard & Poor's and Fitch. Ford is also aiming to regain its investment grade rating in the next couple of years.

Ford is also working closely with parts suppliers like TRW and Johnson Controls (NYSE: JCI  ) to increase efficiency. By simplifying its parts and using more common parts across multiple regions and models, the company is reducing costs that helps boost margins and hence increase its competitiveness.

Investors also see good potential in Ford's shift to greener cars. While other carmakers are pushing into the electric vehicle space -- such as Tesla (Nasdaq: TSLA  ) , who aims to introduce its electric sedan by 2012 -- Ford has plans for a couple of plug-in models in the next couple of years like the Focus. It's already working with Microsoft to utilize its Hohm energy management application for recharging the cars as well.

Do you think Ford deserves its raised status? Add your thoughts in the comments box below on this page, or head over to CAPS to rate the company and check out all the information and opinions the community offers, absolutely free.

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Fool contributor Dave Mock recently upgraded his Ford with a new license plate frame. He owns no shares of companies mentioned here. Microsoft is an Inside Value selection. Ford Motor is a Stock Advisor recommendation. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool's disclosure policy drives a hybrid.

Read/Post Comments (3) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 13, 2010, at 11:19 AM, loki2009 wrote:

    If I didn't know better about Ford, I would think it's now time to sell and perhaps even short the stock given the Fools' johnny-come-late endorsement - and three stars to boot! Must have been tough to roll out that reluctant upgrade following an 800%+ gain in stock price over the last two years (not quite two yet). Fools is an apt name for this group.

  • Report this Comment On August 13, 2010, at 1:11 PM, Adamu07 wrote:

    "Conservative" might be a nicer, and more accurate word, if one were so inclined :)

    Going with the flow on CAPS, meaning betting on all 5-star rated stocks to go up, and all 1-star rated stocks to go down, you'd be in the 90+ percentile for all players up there, meaning you would be DESTROYING the S&P 500.

    I'm a holder of F for the very long haul. And I've benefited from most investors not getting on board until just recently, with many more to come in the future!

  • Report this Comment On August 13, 2010, at 5:10 PM, razzamatazzer1 wrote:

    Sell Ford now.We're in for a double-dip recession or a long recession or an inflationary depression....however you want to look at it.Cars are big-ticket items and the last time I checked,the economy is getting worse,not better.Yeah,there were many cars sold,but the stimulis is gone and things are getting bleaker.Wake up Peeps! Sell now,then wait for the first real sign of a recovery.Notice when you see neighbors/friends/family going back to work! Then-BUY-BUY-BUY!

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