When I was 17, my first car was a ’77 Mustang hatchback. Not a dream car like a ’69 fastback, mind you, but I turned it into a sweet ride. I’ve been a Mustang fan ever since. But times are changing, and sports cars are now getting electric makeovers, as evidenced by the Mustang Mach-E that will please some fans while resisting others.
But regardless of whether sports car enthusiasts agree with the changes, investors can benefit from the shares of the companies that made the changes. Several automakers have turned to electrified overdrive, and wade through (F 3.06%) lead that road, a road that may be less bumpy for investors than new Mustang owners.
I would buy Ford stock before buying the newest Mustang.
More electric vehicles
Ford’s plan to electrify 40% to 50% of all vehicles it uses on the road by 2030 is working well. The company sold 27,000 Mustang Mach-E electric SUVs last year and said it plans to build 2 million electric vehicles (EVs) per year by 2026.
Led by Jim Farley, who took over as CEO in 2020, the company is aggressively increasing production of the electric version of the Mustang and its lineup of best-selling F-150 trucks. The company said in December that it had stopped taking orders for the electric F-150 Lightning after recording nearly 200,000 orders, which were not actual orders. Dan closed orders for the 2022 electric Mach-E recently, saying that “due to high demand, the current model year is no longer available for retail order.”
Working with partner SK Innovation, Ford is spending its money to support a new EV lineup, starting with a state-of-the-art car production complex in Tennessee, along with two battery factories in Kentucky. Total investment for the new facility is estimated at $11.4 billion when all is said and done by 2025.
Why not a Mach-E Mustang for me?
The Mustang Mach-E is making a splash with buyers and I love the electric direction Ford is taking, but this car isn’t on my must-buy list.
Japanese car manufacturers dominate the auto dependency landscape and from my own experience I can say that my fourth Toyota SUV and three Honda cars — except for one Civic — have outperformed my Ford Mustang and my Chevy SUV.
I wasn’t a fan of buying vehicles in the first model year either, so I had to get out of line to buy the Mustang Mach-E. This electric Mustang is brand new. I’ll wait for bugs to be fixed and feature improvements made before I get interested.
On the other hand, stock…
I like what Ford is planning from an investor point of view. After vowing to make Ford the competitive engine that produced electric versions of the Mustang and the best-selling F-150 truck, Farley hired Alan Clarke, the former chief engineer of the company. Tesla responsible for its best-selling Model S. This allows Ford to take advantage of hands-on experience.
And Ford has seen revenue growth and hype related to its aggressive EV plans. Since Farley took over in October 2020, the stock has gained about 140% and hit $25 in the last five months, from just under $5 in April 2020.
The recent broader market downturn driven in part by inflationary pressures, supply issues, and recession fears has seen the stock drop to prices just below $17 as of this writing, making for a long-term buy-on-the-dip opportunity. investors. Ford is scheduled to report quarterly earnings on April 27. Investors will want to check how things are when the information is released.
A long term game
Earlier this year, the company forecast growth to continue in 2022, with wholesale volumes increasing 10% to 15%, surpassing the previous guidance of 10%. Analysts expect a revenue surge of 8% by 2022. The company has also set a target to increase operating margins to 10% by 2026 and up to 14% by the end of the decade, potentially doubling from 7.3% in 2021.
The company is targeting an EV sales capacity of over 600,000 vehicles by the end of 2023, following 2021 which sees the company take the No. EV seller position. 2 in the US And although January got off to a slow start, Ford’s EV sales grew four times faster than the rest of the segment.
A strong pricing environment also helps the company. As a potential Mustang buyer, this isn’t something I want to hear, but as an investor, it’s music to my ears.
We are in the early stages of the EV boom. Some Mustang buyers may look back and hope they wait but as Ford ramps up production — driven by a CEO with his pedal to the metal — long-term investors may look back on this moment as a time when Ford buy-on- it’s this declining opportunity that helped push their portfolio.