The financial crisis brought about tough times in the automobile sector. Hearings, bailouts, restructuring, and layoffs were front and center in our homes and the talk of the US media and political scene. But, manufacturers like Ford (F) have responded, reinventing themselves with a more practical line of vehicles that fits today’s “everyday” working person theme. From tough trucks to durable sedans, Ford has embraced the “green” concept for a more energy-conscious global consumer, offering hybrid, electric, and E85 flex fuel vehicles like the Focus sedan and Escape 4×4. With a leaner and meaner approach to business, it appears “Ford tough” is here to stay.
So is Ford a good investment? Well, fundamentally yes. They’re growing and profiting nicely (10 percent projected 2012 revenue growth and a forward price to earnings of just over 5). But, there’s more to investing than fundamentals: A stock’s price is always the final arbiter. As such, the charts tell an important story, and a simple overlay of technical analysis will enhance your risk management, while guiding you to a good short or long term entry point. So let’s get to the annotated charts.
Clearly Ford is oversold on the daily and weekly charts and was overdue for a bounce. If looking to game short term or just nibble longer term, set stops in and around 9.75, depending upon risk. If this level breaks and you are stopped out, look to reinitiate on a longer term basis when the level is taken back out to the upside (or just buy lower if this suits your risk profile). Note that a break of support between 9.80 and 10.00 points to a retest closer to 9.00. Either way, the 9.00 to 10.00 zone looks good longer term.
Remember to set your stop losses and to define where you want to pocket gains. Happy Investing.
Previously published as a blog by Minyanville.
No positions in any of the securities mentioned at time of publication.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of his employer or any other person or entity.