2-Star Stocks Poised to Plunge: Ford?

Market-lagging returns could be written in these two stars.

Brian D. Pacampara, CFA
Brian D. Pacampara, CFA
Jul 6, 2009 at 12:00AM

Based on the aggregated intelligence of 135,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, embattled automaker Ford Motor (NYSE:F) has received a distressing two-star ranking.

With that in mind, let's take a closer look at Ford's business and see what CAPS investors are saying about the stock right now.

Ford facts

Headquarters (founded)

Dearborn, Mich. (1903)

Market Cap

$16.92 billion


Auto Manufacturers

TTM Revenue

$127.76 billion


President/CEO Alan Mulally (since 2006)

CFO Lewis Booth (since 2008)

Compound Annual Revenue Growth (over last five years)


4-Month Return



General Motors

Toyota Motor (NYSE:TM)

Honda Motor (NYSE:HMC)

CAPS members bearish on Ford also bearish on

Citigroup (NYSE:C)

Starbucks (NASDAQ:SBUX)

CAPS members bullish on Ford also bullish on

General Electric (NYSE:GE)

Microsoft (NASDAQ:MSFT)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 2,504 of the 7,290 members who have rated Ford -- some 34% -- believe the stock will underperform the S&P 500 going forward. These bears include All-Star TSIF, who is ranked in the top 1% of our community, and stabbi.

Just last week, TSIF explains why we haven't been driving a Ford lately: "Ford's cars still suffer from being too big, gas hogs, and costly. American "loyalty" will keep Ford out of bankruptcy, but that "trump" card is weak now that many of the foreign cars are actually built in the US. Ford will continue having union/pension and supplier problems even if the economy picks up."

In a pitch from one week earlier, stabbi also taps the stock as one massive liability:

That enormous debt load will be a dramatic hindrance to profitability. That is the main problem I see with this company: debt upon debt. They will be forced to use credit to pay creditors. They cannot generate sufficient cash flow to cover the debt payments. The only way to pay down their estimated 32B in debt is to offer bonds (more debt) or to offer a massive public offering of shares, thus diluting the value of current shares. Either option is bad for the shareholders.

What do you think about Ford, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 135,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.