Ford Motor Company (F +0.29%) investors have every reason to cheer these days. The Detroit car manufacturer has had a great year, with the share price soaring 35% through Dec. 24. And despite the impressive showing, the valuation might still be a major attraction for those interested in the stock.
Is the current price providing investors with a rare opportunity to buy this automotive stock?
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Cheap shares offer a hefty dividend
Ford stock is cheap. Investors can add the business to their portfolios by paying a forward price-to-earnings multiple of just 9.5. It can seem impossible to find shares in a well-known company trading at such a bargain level. Meanwhile, the price makes the dividend yield 4.5%, and income investors will appreciate this setup.
NYSE: F
Key Data Points
Ford's long-term investment case is questionable
Such a low valuation is enticing, however, this isn't a rare opportunity worth taking advantage of. In the past decade, Ford shares have produced a total return of only 64%, coming up alarmingly short of the overall market.
I believe this reveals areas where Ford struggles, namely low growth prospects, compressed profit margins, huge capital expenditure requirements, intense competition, and demand that's sensitive to economic cycles. These are all adverse qualities that long-term investors should seek to avoid when identifying companies deserving of their capital.
