Disproving the Ford Motor Company (F) Bears

I don't suggest trying to time the market. Even an investor who's one part Houdini and one part Buffett would fail at the attempt. When the stock price declines, with so many obvious positives, take the opportunity to add to your position, and when the stock finally improves, you'll be making fantastic gains. Case in point was the recent upswing from $9 to $14, returning excellent gains to investors who bought on the decline. The stock now sits around $12, and if it trends even lower I'll look to add to my position.

Bear case: losing market share General Motors and Ford lost U.S. market share last year, declining 1.7% and 1.3%, respectively. For GM, its 17.9% share marks its lowest in 50 years. Ouch. Detroit had been consistently losing market share to foreign automakers for years, and many consumers refuse to buy domestic because of the stigma of poor quality. Cue massive panic and sell, sell, sell!

My response Calm down, and slowly step away from the ledge. Let me share two reasons I'm not worried about the decline in U.S. market share -- yet. For one, the segment with the highest margins and profits is the truck segment, which Ford and rival GM thoroughly dominate. Toyota isn't giving up trying to grab its piece of the pie, but it isn't making any progress. Ford's F-Series sold enough units for a 10.3% increase over 2011, good for a 1.2% market-share increase, though GM actually lost market share, which it plans to gain back with its 2014 model. Ford's F-Series has been the No. 1 selling truck for 36 years, with sales roughly equal to Chevy Silverado and GMC Sierra sales combined. Not too shabby.

Secondly, Ford just launched fresh designs of two best-sellers, the Escape and Fusion. Reviews have been very positive, even after recent recalls. Ford is so confident in the models that it announced increased production of the Fusion at a second factory. Look for these popular vehicles to help Ford reclaim lost market share over the next two years, and look for the F-Series to bring in major profits with its dominant segment position.

Bottom line A lot of the common bear cases for Ford are either misunderstood or actually give investors a great chance to buy an excellent company at a discount. That doesn't mean there aren't legitimate arguments, especially the underfunded pension or the looming union contracts that will come around in 2015. Those are topics investors need to focus on going forward, not the typical bear argument. For the most part, Ford is an excellent company that should require your attention with the bullish trend in the auto industry.

The article Disproving the Ford Bears originally appeared on Fool.com and is written by Daniel Miller.

Fool contributor Daniel Miller owns shares of Ford. The Motley Fool recommends and owns shares of Ford.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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