In 2021, Ford (NYSE:F) stock has reached a level not seen in the last two decades. The stock rose 136% during the year. So what has suddenly got investors excited about this former automaker, and will the momentum continue in the new year? Let’s discuss what’s next for the Blue Oval.
What’s Driving Ford Stock Up?
On the last day of 2021, Ford stock closed at $20.77, a level it hasn’t seen in at least two decades. If you had invested $10,000 in Ford stock at the start of 2021, your investment would have more than doubled to $23,630 in just one year. Ford stock outperformed its peers General Engines, volkswagenand Toyota engines Last year.
F Data by YCharts
There are a few key factors pushing Ford’s stock up. The first is its upcoming all-electric pickup truck, the F-150 Lightning. Ford’s F-Series trucks have been the best-selling trucks in the United States for 44 years. Naturally, when the company announced an all-electric version of this truck, it received an overwhelmingly positive response. Ford had to close reservations for the truck after it reached 200,000.
In response to strong demand, Ford has increased investment to expand capacity at its Rouge Electric Vehicle Center in Michigan, where the F-150 Lightning will be produced. Deliveries of the truck are expected to begin this year in the spring.
But that’s not the only reason for Ford’s stock rally. The company also announced very strong results for the third quarter. Ford reported higher sales and revenue compared to the second quarter. These figures also exceeded analysts’ expectations.
Ford has done much better than its traditional rivals in terms of the supply of chips needed for its vehicles. He recently collaborated with the chipmaker GlobalFoundries (NASDAQ: GFS) to ensure a smooth chip supply in the future. In addition, the company raised its operating profit forecast for the full year and restarted its dividend.
Image source: Ford.
Ford’s momentum continued in the fourth quarter as the company announced strong delivery numbers for October and November. All of these positive developments contributed to the stock’s significant rise last year.
Is Ford stock a buy?
The big question is, after rising 136%, is Ford stock a buy right now? Ford’s plans could help answer that question.
The company has ambitious plans in the electric vehicle segment. It wants to increase its global electric vehicle production capacity to 600,000 units by 2023. For perspective, You’re here sold about 936,000 vehicles in 2021. Ford plans to invest $30 billion in electric vehicles through 2025.
Ford is also establishing three new battery plants, two in Kentucky and one in Tennessee, to meet its battery needs. These plants will bring Ford’s annual battery capacity in the United States to more than one million units. Additionally, Ford has invested in a solid-state battery technology company Solid power (NASDAQ: SLDP). Ensuring a reliable supply of batteries is important to ensure smooth production and keep costs low. Ford’s battery factories should help it deliver just that. Likewise, battery efficiency will be a critical factor in gaining market share in the competitive electric vehicle market. Ford’s investments in next-generation battery technology show its intention to be at the forefront of technology.
Ford also has major expansion plans for electric vehicles in Europe. It is building an electric vehicle factory in Germany and converting its transmission plant in Halewood in the UK to produce power units for electric vehicles in Europe.
So clearly Ford is doing a lot to establish itself as one of the leading manufacturers of electric vehicles. Like any other electric vehicle company, Ford has a lot to prove. Still, Ford’s deep manufacturing expertise and strong customer loyalty should help it more than new entrants in the electric vehicle space. For this reason, despite the rise, Ford shares look attractive.
Keep in mind, however, that Ford stocks may not generate the kind of returns recently generated by major electric vehicle stocks. But at the same time, the risks involved also seem much lower.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.
