Top Auto Stocks to Consider Buying: Ford Motor Company (F) and More

Ford Motor Company (NYSE:F): The only one of the big American automakers that did not need government help in recent years, Ford has been hailed by many as the savior of the American auto industry. With strong earnings growth and superb management, Ford seems poised to continue to deliver.

  • Forward P/E is a very attractive 7.75. When taking growth into account, Ford is also a winner, as it has a PEG of only 0.28.
  • Analysts are neutral on the stock (mean recommendation of 2.50), and, in fact, the most recent analyst reports (Barclays, Deutsche, Standpoint) have downgraded the stock from buy/overweight to hold. However, the stock still has an average target price of $15.14, which implies a potential stock price upside of 16.28%.
  • Ford pays an attractive dividend of $.40/share, which works out to a yield of 3.2% (one of the highest in the industry). Even though it did not pay a dividend from 2007 to 2011, the company has otherwise paid a dividend to its shareholders since 1987.
  • Aside from the weak results in Europe, Ford’s earnings are strong, and future estimates upbeat. If Ford continues to produce cars that people want to buy, the company’s stock is poised to rise as the world economy continues to recover.
P/E Fwd P/E PEG Avg PT (% implied upside) Div Yield
GM 10.44 7.61 0.88 $34.94 (+25.86%) N/A
TM 19.58 12.51 0.48 $108.58 (+5.83%) 1.33%
F 2.95 7.75 0.28 $15.14 (+16.28%) 3.07%
Edge F GM F GM F

Bottom Line

All three companies look attractive. Toyota is probably the safest, most conservative bet, while GM and F are value plays that can be riskier, but also deliver higher rewards. At any rate, if the automobile industry continues to recover, all three stocks are poised to benefit, so investors should consider all three when investing in the auto industry, and pick the one that most suits their investment style.

The article Top Auto Stocks to Consider Buying originally appeared on and is written by Alex Bastardas.

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