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Ford Motor Company (F), General Motors Company (GM): Are Cars a Good Investment Again?

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Ford Motor Company (NYSE:F)I’m not old enough to remember it, and I’m not young, but there was a time when investing in automobile manufacturers was the safest, most predictable thing one could do.

Been a while, isn’t it? That time is one with the dinosaurs, the Corvair and possibly honest members of congress. Still, despite all the travails the car companies have had, America – and much of the world – still runs on automobiles. At this point, entire cities are built around the idea of freely available cars and that people will use them for their generalized transportation needs.

Which is why the news this week that all of the major car companies reported strong growth in sales – most in double digits – from the same time last year is great news. Sales growth, year-over-year, for a major industry is a great sign for a growing economy and consumer – and business confidence. This is the sort of news that begins to feed on itself and leads to more good news. It’s possibly the best sign we could have.

And auto companies are still undervalued, by my reckoning. Check out these P/E numbers:



F PE Ratio TTM data by YCharts

Winners in the U.S.A … mostly

Ford Motor Company (NYSE:F)

Sales Growth 12-Month Growth P/E EPS Dividend Yield
18% 15.34% 9.39 1.42 2.99%

Ford Motor Company (NYSE:F) leads the pack in terms of sales year-over-year. Combine that with solid growth and a decent dividend and it looks eminently investment worthy. Both the newer Ford Motor Company (NYSE:F) Fusion and Escape set sales records and so did the relaunched Lincoln MKZ. Heck, the F-Series truck sales grew 24%! Given its newly reported sales figures and the share growth of the last six months, I’d say the time to buy is now. Yes, there were some lean years, but the economic conditions are right for Ford Motor Company (NYSE:F) to come back in a good way.

General Motors Company (NYSE:GM)

Sales Growth 12-Month Growth P/E EPS Dividend Yield
11% 28.26% 10.33 2.92 n/a

General Motors Company (NYSE:GM) – once the world’s largest company – had a harder time during the great recession. Still, the firm’s cars are selling again with Ram pickup sales increasing 49%. That’s a sign that not only are people buying cars…they’re buying expensive cars. Those Rams – good as they are – aren’t lightweight cheap vehicles. Shares in General Motors Company (NYSE:GM) have been on the move upward most of the year and this news won’t slow them down. Only the lack of confidence by not offering a dividend makes me rate General Motors Company (NYSE:GM) lower than Ford.

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