This week, Ford Motor Co. (NYSE: F) announced company insider Jim Hackett will take over the job of CEO, and the stock rebounded slightly. While Ford stock is still down about 10% so far in 2017, this is actually the perfect time to buy Ford stock…
Money Morning Executive Editor Bill Patalon thinks there is great value in Ford stock at these lower prices and remains bullish on it as a long-term play. Right now, F stock trades just above $11 per share.
[ad#Google Adsense 336×280-IA]Of all the carmakers – and despite its large size and Rust Belt roots – Ford is pacing the field in embracing the transformation from a pure vehicle-maker into more of a mobility provider.
That means it’s thinking of new ways to get people where they want to go, including Internet-enabled and driverless cars.
Silicon Valley tech companies may get all the press with their prototype models of self-driving cars, but Ford already has the infrastructure in place to actually mass produce them.
With a forward-looking mindset, it’s already in the future car business.
According to Patalon, Ford stock is already one of the best technology investments on the market. It is confronting head-on the changes hitting its sector, not only embracing them, but driving them.
“Ford has gone beyond cleaning up its act and become an indisputable industry leader in that all-important profit generator: innovation,” Patalon said.
While we all will need cars, taxis, and other vehicles, the way they are designed, operated, and serviced is changing.
New services and new business models – including Uber, Lyft, and Zipcar – are changing how consumers view car ownership.
Keeping this front and center in planning is why Ford’s efforts should pay off big in the future.
And while the market has yet to give it the credit it deserves as a high-tech leader, the company has some new technology hitting the streets soon that could act as a shot of “nitro” to the Ford share price.
These changes all emanate from the Ford Smart Mobility unit. Who ran that unit? New incoming Ford CEO Jim Hackett. Before joining Ford Mobility, Hackett was the corporate CEO of Steelcase Inc. (NYSE: SCS), where he transformed the company from a humdrum maker of desks to a designer of flexible, output-enhancing workspaces.
When asked about the new incoming CEO, Patalon didn’t mince words…
“I love this move,” Patalon said.
Here’s why this is such a smart move for the company and what it means for Ford stock going forward in 2017…
Ford Stock Is an Absolute Bargain Right Now
As you can see, Ford’s new corporate CEO knows quite well what he’s got in the Ford Mobility unit. And he’ll likely continue to champion the innovation initiative within the company.
“Thanks to this ‘takeover from within’ – as some observers are saying – Hackett is being shifted from a really cool sideshow inside Ford to the headline performer,” Patalon said. “Hackett will lead that charge. And he’ll do it successfully.”
“In short, with Fields now ‘out of the way,’ Hackett moves from the role of superstar follower to the guy who’s going to lead Ford to the top of the heap in the car business of the future.”
Carmakers worldwide are attempting to adapt to the changing transportation landscape, but none are adapting as quickly, or as aggressively, as Ford.
The company is already making investments in transportation-tech startups, has ramped up its experimentation, and this past February announced a deal to invest $1 billion over the next five years in a new driverless-car venture called Argo AI.
(“AI” stands for artificial intelligence – one of the biggest tech trends we’ve been following. It’s a defining characteristic of the driver-free technology Argo is developing.)
For its billion-dollar stake wager, Ford gets majority ownership of the Pittsburgh-based Argo, led by two engineers who were previously at Alphabet Inc. (Nasdaq: GOOGL) and Uber Technologies Inc.
Last year, Ford said driverless cars could account for a hefty 20% of vehicle sales by the late 2020s. It’s already on the road to making that happen.
But driverless cars are not the only project in Ford’s pipeline. Here are just a few recent partnerships:
- March 2017 – Ford partnered with Panasonic for Smart Service Kiosk to improve the customer experience at dealerships.
- February 2017 – Ford partnered with Vodafone Group Plc. (Nasdaq: VOD) to offer a built-in modem with Wi-Fi.
- January 2017 – Ford partnered with Amazon.com Inc. (Nasdaq: AMZN) to make Amazon’s Alexa its driving assistant.
- September 2016 – Ford partnered with three autonomous car startups – Spatial, HAAS Alert, and Cargo – to create technology products for autonomous and connected cars. This includes a social overlay for GPS guidance systems and in-vehicle general stores that give ride-share drivers cargo kits stocked with snacks and other items passengers may want.
- July 2016 – Ford partnered with Jose Cuervo to make car parts out of leftover agave plant fibers to produce more sustainable bioplastic parts.
Patalon recommends buying Ford stock now and continuing to accumulate it over the long term. Indeed, the market thinks Ford is cheap at current levels, as well, because each time it trades in the $11 area, buyers seem to rush in. It happened twice last year and seems to be happening again now.
As if the promise of a huge payoff later were not enough, the stock offers a beefy 5.4% dividend yield to pay investors now while they wait.
— Money Morning Staff
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Source: Money Morning