Ticker of the Week: Ford Motor Company (Ticker: F)

BY MARK SEBASTIAN

April 27, 2024

TRADE IDEA

Buy to open F May 17, June 07 2024 13 call calendar spread for .13 or less

Selling May 17, 13 call
Buy June 7, 13 call

Net debit

Each week, my team will give an overview of a stock. I’ll discuss fundamentals, Licia will analyze the charts, and AG will break down the volatility.

Have a stock YOU want us to review? Email my team here. – Mark

Hey Trader,

No, we are not breaking down TSLA…we are breaking down the oldest of the old…Ford…the maker of the Model T, the Mustang, and the F150 … .with earnings out is and the stock only 13 dollars, is there value there….let’s break it down.

Ford Motor Company (Ticker: F)

Relative to its price, Ford does pretty darn well. In the last 12 months the company has had positive cash flow of almost 3 dollars a share. The revenue per share is a whopping 44.07!

But Auto is a tough business to be in….the regulators, the laws, the unions, Ford is dealing with a lot

But, fundamentally, this is a pretty darn sound company. Cash on hand is about 66% of the value of the company. The EPS of 13.35 is reasonable (especially in this market). The company has positive cash flow and pays a 5% dividend yield

So what gives…why is the stock only 13 dollars? The answer is simple…the company has a market capitalization of 51.7 billion dollars, more than GM…but they currently have 100 billion in long term debt.

TSLA which makes far less than Ford in revenue and EPS and has a PE of 41 only has 3 billion in long term debt.

Ford’s issue is debt…not results.

So the question is…can they outgrow the debt…my belief is that they can.

WIth the really nice earnings they just had if I had to pick an automaker to buy…this one might be it.

-Mark

Ford (Ticker: F) has been trading in what the Japanese call a box range since September 22, 2023.

That range is a mere two dollars from $11-$13.

It did trade beyond a few times, but overall a pretty boring stock.

F does look like it is bull flagging here but we need a close over $13.05 and resistance comes in at $13.70.

Beyond $14, F could trade up to $15.25.

Support sits at $12 and then $11.

As I said, it looks kinda boring.

Ford Volatility is lower than a sidewalk curb

Mark, Licia and I ran the OP Live show on the Tradier Hub and we did talk about F. As you can see from the chart below the stock is really going nowhere. As Mark pointed out, F is paying down debt and keeping the dividend reasonable. Overall that makes for good corporate governance.

The reality is 90 day implied volatility is at the bottom of the 1 year range. So that summer driving season to buy juice is here. For F, I would not go too crazy as the most I might be able to get out of the options is $1 in underlying move.