Why Ford Motor Co. Will Have a Strong 2014

Ford's 2015 F-150 will have greater fuel efficiency, and the automaker is back to competing globally.

Jan 27, 2014 at 1:45PM

The financial crisis nearly brought the American automotive industry, including Ford (NYSE:F) and General Motors (NYSE:GM), to its knees. Years later, enormous progress has been made. Ford and GM are back to reporting growth, proving once again that American carmakers can compete globally.

GM and Ford are seeing strong sales momentum as the new year begins. Ford in particular looks to have a fantastic year ahead of it. This is due in part to its recently announced strategic initiatives involving its flagship F-150. Those measures, in addition to its strong growth in recent quarters, mean that investors are set up very well for the coming year.

Ford makes a major change
Ford announced a huge shift in its F-150 line of pickup trucks, which is its main profit engine. The new line of 2015 F-150s will feature an "Eco-Boost" engine and a new aluminum body, both of which are designed to result in greater fuel efficiency. Ford hasn't revealed new gas mileage information, but analyst expectations are pegged at 26 or 27 miles per gallon. If accurate, that would represent a 15%-20% increase in fuel efficiency from the existing model.

Meanwhile, General Motors can't seem to get out of its own way. After having to be bailed out during the heart of the recession, GM was given new life from its 2010 public offering. It's back to reporting growth again: GM's third-quarter sales rose nearly 4% versus the prior year. The company also grew adjusted earnings before interest and taxes by 13%.

The 2014 Chevrolet Silverado is also in the running for the North American truck of the year. With all this in mind, it seems natural for GM to have a strong 2014 ahead as well. However, GM just announced that it is recalling 370,000 full-size 2014 Chevy Silverados due to a potential fire hazard.

This only complicates General Motors' progress in its quest to compete with Ford in the realm of pickup trucks. The Chevrolet Silverado is the second-best-selling pickup in the nation, but it just can't reach the F-150's heights. Ford's 150 is simply the king of pickups; it has had the honor of being America's top-selling pickup truck for an amazing 37 years in a row.

Ford's shareholders are in a great spot
Not only does Ford already dominate the market for pickup trucks in the United States, but it's once again competing across the world. Ford's third-quarter report showed that its three international markets posted a combined profit. The third quarter was the first time that this has happened in more than two years.

In all, revenue grew 12% in the quarter. This is far better than General Motors' sales in the same quarter. Ford very recently increased its dividend by 25%, and provides a 3% yield. That stands well above the yield on the broader market. After suspending its dividend in 2006, Ford resumed its payout in 2012 and has increased it twice since then. To its credit, GM also just announced a dividend; like Ford, GM's dividend yields 3%.

The Foolish conclusion
While the financial carnage caused by the 2008-2009 recession brought the U.S. auto industry to the brink of collapse, those days are well in the rearview mirror. Both Ford and General Motors are returning to sales growth. At the same time, there's a clear winner among the major U.S. auto makers.

Ford's F-150 is the best-selling vehicle in the country, and its new initiatives designed to generate greater fuel efficiency will only improve its standing in the near future. Ford simply dominates the pickup truck market, and its international operations are back on track.

As a result, it's not at all surprising to see that Ford sharing its new-found success with shareholders. The future is bright for both Ford and its investors.

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Bob Ciura has no position in any stocks mentioned. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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