The past few years haven’t been kind to investors in Ford Motor Co. (NYSE: F), but uncertainty surrounding Ford has investors overlooking its significant upside potential.
Ford is in the midst of a significant product transition. It’s largely exiting the midsize sedan business in North America, and this strategy is the biggest driver behind its recent sales decline. Sedan sales fell 23% in the U.S. in the last quarter, year over year, almost entirely on declining volume of models Ford has discontinued. Sales of the popular Explorer SUV also fell sharply, but this was expected, as the company shifted production to the 2020 model in the quarter and had limited inventory available at dealers.
Heading into the second half of the year, Ford is primed for better results. The new Explorer has started shipping; Ford’s truck lineup – now including the midsize Ranger – is stronger than ever; and the new car lineup is more focused, with fewer sedans. Better still, the company’s ratings for product quality have been rising, and it has been improving its business model. In Europe, for example, Ford has focused on restructuring for profitability and efficiency with a concentration on new electric vehicles and, perhaps more important, SUVs.
Shares of Ford’s stock recently traded at a forward-looking price-to-earnings (P/E) ratio near 7, and its dividend recently yielded 6.3%. The stock is worth a closer look.
Ask the Fool
Q: What other major stock indexes are there, other than the Dow and the S&P 500? – B.B., Midland, Michigan
A: There are a bunch of major U.S. indexes. The Dow Jones Industrial Average is the most famous, but it contains only 30 companies, including American Express, Apple, Chevron, Home Depot, McDonald’s, Microsoft and Pfizer.
The Standard & Poor’s 500 features 500 large U.S. companies, and its components account for about 80% of the total market value of the U.S. stock market. The Dow and the S&P 500 are often viewed as proxies for the overall U.S. economy.
Other major indexes include the Wilshire 5000 Total Market Index, which includes almost every publicly traded U.S. company; it originally sported roughly 5,000 companies, but now has about 3,500. The Russell 3000 Index includes close to 3,000 of the largest U.S. companies based on market capitalization (current share price multiplied by number of shares outstanding). The Russell 2000 is a small-cap company index, made up of about 2,000 of the smaller companies in the Russell 3000.
Looking beyond the United States, the Vanguard Total International Stock index represents almost all of the world stock market outside the U.S. There are many other indexes, broad and narrow, with some covering international regions, such as Asia or Brazil, or various sectors, such as health care or financial services.
Q: How does one get money into an online brokerage account in order to buy stocks? – G.L., online
A: You could walk into a branch of the brokerage with cash or a check, or mail in a check, or use direct deposit or electronic transfer. Learn more about brokerages at TheAscent.com.
My dumbest investment
My dumbest investment was selling my Beyond Meat shares too early in fear of the plunging value at the time. – Z.D., online
The Fool responds: There are lots of ways we can blunder when investing: We can buy too soon or too late, or sell too soon or too late, among many others.
It’s common to sell a stock too soon – perhaps because it starts retreating, or you’re getting impatient for it to perform, or it’s gone up to a satisfactory degree, or you simply spotted another attractive opportunity. For best results, though, if you’re going to invest in individual stocks, try to find the most compelling companies with great long-term prospects – and then buy into them when they seem undervalued relative to the value you expect them to have in the future.
Keep up with their progress so that you’re not blindsided by bad news and so that you keep a solid sense of their potential. Remember that even great stocks will fall or stall from time to time.
With Beyond Meat, if you’re convinced that the meat-alternative market is going to grow significantly over time and that Beyond Meat has the resources and competitive advantages that will help it prosper, then you should hang on through ups and downs. If you learn something that causes you to doubt its future, then consider selling – ideally after doing more research.