Shares of Ford (NYSE:F) have had a remarkable run since the company's historic lows in late 2008. It's almost hard to believe that this steady, profitable company actually closed at a low of $1.26 per share on one day in November of that year, but those of us who were following it then remember: Ford's survival was truly in doubt.
It's not in doubt anymore, thanks to the work of now-retired CEO Alan Mulally and his team, along with a much-improved economy, but it's fair to ask whether Ford's stock has much more room to grow.
After all, here in the U.S., Ford's turnaround looks pretty mature -- and after several years of recovery-driven growth, domestic auto sales look to be leveling off.
But Ford is still overhauling its foreign operations. Ford Europe needed a strong dose of the same medicine that helped Ford North America, while the company's Asian branch has quickly become a major player in the huge Chinese market. And there's still work being done here in North America, too.
That work is all still in progress, and that could mean further opportunities for growth in Ford's shares. While there's no guarantee that Ford's stock will rise significantly from current levels over $15 per share, here are three factors that could push shares even higher in the not-too-distant future.
Reason No. 1: Ford's Asian expansion
Through the first nine months of 2014, Ford's sales in China were up 26% year over year. That follows a 49% increase in 2013. Its increases have slowed a bit in the last couple of months, in part because China's overall market is slowing, but the Blue Oval is well positioned to grow sales significantly in coming years.
Why? Because demand has been very strong, and Ford is still building the factories to supply it. Ford's Asian expansion effort is its biggest in decades, a nearly $5 billion investment in new factories and facilities in China, India, and other parts of the continent.
Ford has opened six new factories in the region since 2012. Another four new factories are set to open over the next year or so. The company's goal has been to have a 6% share of China's market by the end of next year -- it is closing in on 5% now -- and those additional factories should help give it the needed volume.
Ford's profits in its Asia-Pacific region have not kept pace with its torrid growth in China, in part because much of its earnings were reinvested in the expansion effort. Ford Asia-Pacific earned just $415 million in 2013, and is expected to earn about $700 million this year. But those numbers should go up significantly once the factories under construction begin to pay off.
The upshot: Ford's Asia-Pacific region could contribute $2 billion or more a year to the automaker's bottom line after 2016, up from $415 million last year.
Reason No. 2: Ford's European turnaround
Like most of its regional rivals, Ford has lost a lot of money in Europe in recent years: $1.75 billion in 2012, $1.6 billion in 2013, and $619 million so far in 2014.
Those losses have come as the European auto market has played out its own version of the drama that nearly crushed Ford and its Detroit rivals last decade. Protracted recessions in key European nations have kept new-vehicle sales well below historical norms, and there are too many auto factories in Europe for the level of sales to profitably support.
The result: aggressive discounting, crushed profit margins, and big losses. In fall 2012, Mulally responded with an aggressive restructuring plan for Ford Europe that closely followed the model Ford employed in North America.
That plan had three parts: restructuring, which included the closure of three Ford plants in Europe; an expansion of the company's regional product offerings; and efforts to refocus dealers on profitable retail and commercial fleet sales while enhancing customer service and improving Ford's resale values.
The good news is that the plan is on track: Ford closed two U.K. factories last year and is set to close a big assembly plant in Belgium next month. On the product front, Ford is tapping its global product portfolio to bring 25 new or significantly refreshed models (since 2012) to European dealers by the end of next year. And retail sales have risen in a tough market, as Ford's moves with dealers have begun to pay off.
Ford Europe isn't out of the woods yet: It will likely post a loss of about $600 million for the fourth quarter, and another $250 million in losses is expected next year. But despite deteriorating conditions in Russia and a likely increase in the automaker's European pension liabilities, 2015 should bring a roughly $1.35 billion year-over-year improvement to Ford Europe's bottom line. And if Ford Europe returns to profitability in 2016, the improvement could be even more dramatic.
The upshot: Improvements in Europe could mean $1.5 billion or more added to Ford's pre-tax profits from 2013 to 2016.
Reason No. 3: Key new products will boost sales and margins
Consider this: The U.S. market for full-size pickup trucks has boomed in 2014, but sales of Ford's market-leading F-Series are down 1.4% through November.
That's not because Ford's trucks have been significantly outpaced by rivals. It's because supplies of Ford's trucks have been limited by extensive downtime at its two truck factories, a result of the complicated changeovers needed to produce the all-new 2015 F-150.
Those changeovers, which were complicated by the new truck's use of aluminum-alloy body panels, are expected to cost Ford 90,000 units of production once all is said and done. But the good news is that the first of those two factories is already converted and making the all-new pickups, and the second will be converted by spring.
Ford's truck sales might not be up to full speed until the middle of next year. But once they are, it's a good bet Ford's new truck will regain any lost market share. While that new truck is probably more expensive to produce than the model it replaces, Ford has increasingly emphasized higher trim lines on its pickups -- a move that is believed to have substantially increased its profit per sale, and which should help keep its profit margin strong going forward.
Meanwhile, Ford's new-product cadence continues to be brisk across the lineup, around the world. Generally speaking, fresh products command higher prices (or, put another way, sell with fewer discounts) than those that are a few years old, and that means higher profit margins for Ford.
The upshot: Just as Ford CFO Bob Shanks warned late last year, company margins have suffered in 2014 because of the costs of launching significant new products. As those products gain traction in the marketplace, Ford's margins - and profits, and share price -- should improve.
John Rosevear owns shares of Ford. The Motley Fool recommends and 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.