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Ford Motor Company (F), General Motors Company (GM): Three Reasons to Go Long With This Automaker

Ford Motor Company (NYSE:F) During the financial crisis of 2008, Auto giant Ford Motor Company (NYSE:F) bent but didn’t break. While Chrysler and General Motors Company (NYSE:GM) took a $35 billion bailout from the U.S. government, Ford Motor Company (NYSE:F) opted to restructure and make a comeback on its own. Now, not only has Ford Motor Company (NYSE:F) regained its footing, it’s charging full speed ahead.

Here are three reasons why I think Ford Motor Company (NYSE:F) is a buy.

1. Earnings

At a time when investors are hesitant to believe in car companies, Ford Motor Company (NYSE:F)’s second quarter earnings blew expectations away. The firm posted EPS of $0.45, far above analysts’ predictions of $0.37. Ford Motor Company (NYSE:F)’s revenue increased by 14% to around $38 billion, which helped Ford haul in $2.6 billion in pre-tax profits. Even after taxes, Ford pulled down net income of $1.2 billion, up 5.2% from last year.

Competitor General Motors Company (NYSE:GM) also posted net income of $1.2 billion, but that is a decrease of 20% from $1.5 billion last year. Apparently Ford’s “One Ford” plan is working. It seems that all of the talk about restructuring and profitability actually turned into a solid plan. Already, Ford is seeing promising sales in key areas.

2. Golden State sales

California is a particularly important state for auto makers: one out of every ten new cars sold in the U.S. is sold in California. Traditionally, Toyota Motor Corporation (ADR) (NYSE:TM) and Honda have dominated the West Coast, but the second quarter saw Ford making some gains in market share.

The new Ford Fusion is the top seller out West and around the country as sales of the vehicle are up 18% for the first half of 2013. Specifically, Ford sales in Northern California have grown 35% this year. Overall U.S. sales also increased by 13.4%, beating industry growth of 8.4%.

Toyota Motor Corporation (ADR) (NYSE:TM) still owns the lion’s share of the market with 19.2%, but the Japanese firm’s share declined from 25% since 2008. Meanwhile, Ford continues to catch up and now holds a 9.5% share compared to 6.5% in 2008.

Toyota Motor Corporation (ADR) (NYSE:TM) executive Bill Fay said that he isn’t concerned about Ford’s efforts, mainly because he says Ford is spending too much money on incentives to get customers to buy. But I think Toyota Motor Corporation (ADR) (NYSE:TM) has plenty to be concerned about. Consumers are finally realizing that Ford makes solid cars, and just maybe they don’t have to turn to imports anymore. Consumers are picking up on Ford’s shift to cars and crossovers and away from foreign trucks and SUV’s.

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