A Gift for Dad this Father’s Day – Buy Ford NOW!
Tim is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
For the momentum investor this will sound absurdly optimistic, but coming off the worst month for the markets since the Nixon administration (okay, that’s a bit of an exaggeration) – and then the recent disappointing economic numbers – investors should be absolutely ecstatic. It just doesn’t get much better than this.
Case in point – the economy added 69,000 jobs last month – well below expectations, and the nation’s unemployment rate ticked up to 8.2% (don’t try to figure it out, that’s what economic geeks are for). Now let’s look at this same figure with a slightly different – half-full – approach. It wasn’t long ago that adding jobs in any month would have been a godsend - it beats the alternative, right? How quickly tides and sentiment turn.
Another oddity that supports the notion the market is overreacting were the manufacturing numbers for May. For the 34th straight month manufacturing productivity has increased – but was below expectations – so the headlines scream “Manufacturing Growth Slows!”
More negatives include the dollar falling after the “disastrous” jobs data, and this one really hurts. With all the problems going on in Europe, the dollar falls against the Euro? That’s just plain wrong. And since we’re traveling the globe, let’s not forget the passé-but-always-fun-to-fall back on news of a slowing Chinese economy impacting the U.S. markets.
As the incomparable late Paul Harvey said, “…and now the rest of the story.” Adding jobs – any number of jobs – doesn’t warrant this kind of sell-off, nor do the other economic results. And that’s great news for investors looking for any number of fantastic values – and there’s a lot of them.
Lost in all the doom and gloom was the growth in consumer spending in April. Apparently no one told Americans the world is going to hell in a hand basket, so they just kept on spending. That – combined with lower inflation – is one nice combination. The impact consumer spending has on our economy cannot be overestimated but shhh, don’t tell anyone. If word gets out the sky isn't falling there will be fewer investment opportunities.
Then Along Comes Ford
As usual Ford (NYSE: F) was one of the first automakers to post sales results for the month – and they were stellar. As discussed a little over a week ago Ford was already a steal – and that was before the recent sell-off. All in all May sales increased 13% vs. May 2011 – including a 29% jump in F-series truck sales, a 31% rise in the sale of vans and increases in both Explorer and Fusion units. So naturally the stock is down over 3% for the day, making a good investment even better.
Lest you think Ford is alone take heart – Volkswagen (NASDAQOTH: VLKAY) is expecting a strong May, and Chrysler already announced a 30% jump in sales. GM (NYSE: GM) is bucking the market trend – and rightfully so – after announcing the highest sales volume numbers in three years. Like Ford, GM has long been one of the best values in the sector and remains a sound investment option.
Toyota (NYSE: TM) sales jumped through the post-tsunami roof, and Honda (NYSE: HMC) is likely to announce huge gains as well. Of these two Honda is by far the better investment option, and most analysts seem to think so as well, raising recommendations to strongly outperform.
To sum up - in spite of what you see and hear, auto manufacturing is humming along quite nicely. And with consumers continuing to open their wallets coupled with the focus on Europe and China, the entire sector offers fantastic value-investing opportunities – and Ford is the best of the bunch.
timbrugger has no positions in the stocks mentioned above. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford and General Motors Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.