Will Ford's Stock Have Another Summer Swoon?

Photo Courtesy of Ford. 

Over the last few years Ford (NYSE: F  ) stock typically takes a beating during the summer months and then often rallies back during the autumn months. Is it destined to follow the same pattern this year? Nope, I don't think so, not this time. Even after its rally from a 52-week low of $8.82 to near $15 I don't think Ford stock is due for a pullback, and I think most investors still see enough upside they won't sell off shares. I could easily be wrong, because you never know what the market has in store for us day to day, but here's some good news going into the summer months.

May forecast
We won't have the exact numbers for how many vehicles sold in May for a couple weeks, but investors got a little antsy in April when SAAR – seasonally adjusted annualized rate – of vehicle sales dipped below 15 million. Everyone had their trigger finger on the sell button, but relax, according to TrueCar (link opens a PDF) the SAAR is predicted to bounce back this month.

To spread a little light on TrueCar's forecast I'm about to show you, these aren't numbers pulled out of a hat or picked blindfolded. TrueCar bases its forecast on actual transaction data and is refined through other historical factors that impact vehicle sales.

Without further ado...
When comparing manufacturer's percentage change vs May 2012, Nissan and Ford are the big winners, with Volkswagen a distant third. TrueCar forecast of percentage increases at 25.4%, 20.1%, and 9.4%, respectively. Moreover, the entire industry is forecast to increase 12.1% over the previous month, April. That should be enough to calm down those with a trigger-happy sell button. 

Percentage change is nice, but we have to keep that in perspective with total volume. Since Ford and General Motors (NYSE: GM  ) sell higher volumes in the U.S. it's difficult to gain a high percentage increase year over year. When looking at total volume TrueCar's forecast shows GM on top, predicted to sell just over 266,000 vehicles this month, with Ford in second place at just under 247,000.That definitely takes a little excitement out of Volkswagen's 9.4% increase when you consider it's predicted to sell only 58,000 this month. It's also eye opening to how impressive Ford's predicted 20.1% gain is.

But wait, there's more!
Right now, this coming summer and second-quarter earnings are looking good for domestic auto investors. It seems the numbers predict that we'll avoid a summer swoon and have great sales figures to boot. What's more, due to the construction rebound full-size pickup sales continue to increase – bringing in more profits than the average sale.

"Full size truck sales continue to gain momentum in May and we expect the segment to post a 22 percent increase compared to the nearly nine percent industry increase," said Jesse Toprak, senior analyst for "Stability in the industry is now the norm, which is a positive for automakers as it results in the ability to optimize production levels, therefore improving profitability." 

Bottom line
As a long-term investor, do you know what two of my favorite words are? Hint: both are in the above quote – stability and profitability. It wasn't long ago that those two words were impossible to incorporate into a sentence with Detroit's Big Three automakers. Things are different now, and as such, I think Ford's stock and its investors can finally have a relaxing summer without taking a beating.

If you're concerned that Ford's turnaround has run its course, relax – there's good reason to think that the Blue Oval still has big growth opportunities ahead. We've outlined those opportunities in detail, in the Fool's premium Ford research service. If you're looking for some freshly updated guidance to Ford's prospects in coming years, you've come to the right place – click here to get started now.

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  • Report this Comment On May 24, 2013, at 5:47 PM, AmericanFirst wrote:

    I'm amazed how the market continues to punish Ford, while Ford continues to out perform GM almost every metric.

  • Report this Comment On May 24, 2013, at 7:41 PM, TMFTwoCoins wrote:

    Yeah I'll never understand why Ford always seems to trade at undervalued prices. It's all you could ask for in an investment in my opinion.

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