Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Ford Motor Company (F) May Have a Short-Term Bumpy Ride

Ford Headquarters. Photo Courtesy of Ford Motor Company (NYSE:F).

I’ve been a Ford Motor Company (NYSE:F) supporter since Alan Mulally took over as CEO in 2006. Ford Motor Company (NYSE:F)’s been one of my most profitable investments, and one of the most intriguing business turnarounds to follow in decades. I’m a long-term investor so the short-term speed bumps that the company’s stock will hit don’t matter as much to me, but for those whose focus is only a few months it could be a bumpy ride.

Early bird gets the worm
One of the first issues that could cause a sell-off of Ford Motor Company (NYSE:F) stock is people simply taking profits. Take a look at the graph below to see how far Ford’s share price has surged this past year:

F Chart

F data by YCharts

Ford Motor Company (NYSE:F)’s 52-week range is between $8.82 and $17.25, and those who bought exactly a year ago have realized an 86% increase at the time of this writing. That’s a healthy gain. In such a volatile industry where a company’s stock can tank, regardless of how well it’s performing, because of outside economic factors, such a gain could tempt people to take their profits now. In a market where the early seller typically gets the largest profit, it can make for a vicious cycle as people run to the exit.

If Ford continues its trek toward $18 it’s very possible we will see resistance in the share price as people begin to take profits from Ford’s nice one-year run-up. But, there are some short-term catalysts that will help mitigate that selling pressure.

The first positive catalyst would be short-term traders buying in before Ford Motor Company (NYSE:F)’s second-quarter earnings report on July 24 because they expect Ford to beat Wall Street estimates and give the stock a small boost. I think it’s a good bet in my book because it’s been a very strong first half of the year for Ford in the U.S. market. Ford Motor Company (NYSE:F) has gained market share in an industry seeing lowering incentives and higher transaction prices. In addition to that, the rebound in U.S. sales has been led by the most profitable full-size-truck segment – where Ford derives most of its profits. For those reasons we can expect a strong report and operating margins to again exceed 10%-11% – favorable to competitor General Motors Company (NYSE:GM) who reported a 6.2% operating margin last quarter.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.