For someone who put down $1,000 into Ford's (F -0.42%) stock in 2018, it hasn't exactly had a happy journey. Shares are up only 36% over the past five years, so this thousand-dollar investment would be worth $1,365 today. Someone who simply put some capital into an index fund tracking the broad S&P 500 would've done meaningfully better. 

While this top auto stock has clearly been a loser in recent years, can the future provide for better returns? Let's see if this stock is a worthy portfolio addition right now. 

Preparing for an electric future 

Without a doubt, Tesla is the king of electric vehicles (EVs). Over the past decade, Elon Musk has successfully brought these cars to the mainstream. Plus, governments around the world are putting resources behind trying to reverse the effects of climate change. Doing so has big implications for the auto industry. 

With its 100-year-plus history, Ford hasn't been sitting idle. Early last year, it reorganized its business to separate its EV division, known as Model E, from the company's legacy operations. Model E registered a $700 million operating loss in Q1, but the business is ramping up production. In twory, building at scale should lead to a path to profitability. The goal is to produce an 8% operating margin in 2026. And that year, Ford plans to make and sell 2 million EVs.

To be fair, I believe that all the buzz around EVs is warranted, not only from an environmental perspective, but also from a growth one. In 2022, EV sales accounted for only about 7% of new car sales in the United States. This figure has steadily climbed over time. And as consumers suppress their range anxiety, mainly with the development of better battery technology and a growing footprint of charging stations, EVs can become more popular among the general public. That means the industry more broadly, and Ford more specifically, can benefit from these growth prospects. 

This is still an automaker 

But investors should still remember that Ford is a car manufacturer, and this industry isn't typically friendly to investors. For starters, profitability is bleak. Ford's quarterly net profit margin has averaged just 2.5% over the past five years. And the fact that the industry is insanely competitive means that Ford will always have to compete on price, which can pressure the ability to expand margins. 

These businesses require a lot of capital for ongoing operations, as well as to invest in growth initiatives. Putting money behind research and development efforts for EVs, or improving massive plants with new capabilities, isn't cheap. In fact, management set a goal to invest $50 billion in EVs and other technologies by 2026. And during the first three months of this year, $1.8 billion of cash went toward these capital expenditures. That was more than 80% of the company's operating cash flow in the period. 

Ford, or any other major automaker, might make for a good investment. But that might only be if you're able to successfully predict when a recession is about to start, at which point it would obviously be a good idea to dump your shares. And then it would be a smart move to buy the stock right before an economic rebound is to occur. That way, investors can avoid sales and earnings slowdowns, and benefit when these top- and bottom-line figures are back on their way up. 

This approach sounds simple on the surface, but it's almost impossible to do successfully. No one knows when a recession is going to happen. And no one knows then when an economic boom is going to start. Owning cyclical and capital-intensive companies exposes investors to this reality of severe fluctuations in business results that are dependent on macro forces. 

All of this is to say that Ford isn't a good investment for my personal portfolio. But for investors who like these long-standing industry incumbents, as well as the hefty dividend yield, it might make sense to own shares. It's just hard to reasonably expect market-crushing returns over any extended period.