Andrew: Hey Fools, Andrew Tonner here. I'm joined today by Brendan Byrnes, our Industrials Analyst for Fool.com.
Brendan, let's take a look at a personal holding, and one of the most popular industrial stocks in all of Fooldom, Ford. It's a company that had a huge run-up at the end of 2012, but looking at 2013 and even beyond that, what are some of the biggest threats that you see facing this company?
Brendan: As you mentioned, a huge run-up. At the end of July below $9 a share, up about 50% since then, so definitely a huge run-up, especially for a big company, a cyclical company like Ford, that's not usually prone to those huge swings, so definitely good news there for investors.
What are some things you have to watch? I think in the near term it's Europe. Ford on track to lose $1.5 billion there this year alone, another $1.5 billion likely, they forecast, next year. That 2012 number was revised up twice, so you have to keep that in mind when you're looking at it going forward.
But they do have an ambitious plan, going forward. Al Mulally laid out his plan in 2013 for Europe and beyond. For Europe, 15 new models coming out. They're closing three plants; we know their capacity was below the major auto makers in Europe, so they had to do something about that. Closing those plants will help. A new marketing campaign as well.
In the next near-ish term -- next one-two-three years -- keep an eye on Europe as Ford tries to return to profitability over that time period. We'll see if they can do it. Longer term, I think you have to keep an eye on its product line and its competitors, mostly.
We know this is a product-driven business. If Ford starts lagging on its products and its product offering, the quality of its vehicles, its competitors will come in and steal market share from it. Toyota, Honda remain strong in quality. GM has had a hit-or-miss product lineup recently, but they're improving.
As they get these products out of bankruptcy... Their product pipeline basically stopped when they were in bankruptcy, so now as they retool even more going into 2013, big pickup line coming out as well for GM that will be key as they battle forward with the high-selling F-Series pickup.
It remains a product-driven business. You have to keep an eye on the quality of its products, or else customers will start abandoning, Ford will have to incentivize sales big time, offer big incentives, and that decreases margin.
Doing well right now, Ford. I'm a shareholder, I still like this company, but those are two big things; one more near-term, and the other that you're going to have to continue to watch long-term for Ford.
Andrew: Yeah, definitely things that I look at as risks when I look at the stock as well. Brendan, thank you for your insight. Thanks for watching, folks, and we'll see you at Fool.com.
Andrew Tonner owns shares of Ford. Brendan Byrnes owns shares of Ford and General Motors Company. The Motley Fool recommends Ford and General Motors Company. 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.