Ford Motor Co. (NYSE:F) stock has broken through the $14 barrier on vastly improving news concerning the company’s operations. One new award that has to make the company proud is the company has now made the list of the World’s Most Ethical Companies from Ethisphere Institute, a New York City think tank. The list has been made available for the last four years and it’s the first time Ford made it.
Ethisphere made it clear that ethics pay by pointing out that the companies that made its list have returned 53% to shareholders since 2005, crushing the S&P, which has only returned 4% for the same period. It make sense. Companies that can be trusted by employees, vendors, and customers tend to create stronger customer loyalty, which results in higher sales and profits.
Toyota, which made the list in 2009, suddenly accelerated off this year’s list due to its well-documented problems.
The good news at Ford is translating to great news for chief executive office Alan Mulally, who earned 17.9 million in 2009, which was a 6% increase from his 2008 compensation. It’s doubtful his paycheck is going to cause much of an uproar after the kind of year Ford has had for shareholders.
I mean, how could investors complain if they bought F on March 9, 2009? Holding from then until now has resulted in a 715% annual increase! That’s the type of return that should impress any investor. But does that astronomical return mean that the run is over for Ford stock? I think not.
Consider that Ford shares hit a five-year high last week after Moody’s Investors Services upgraded $65 billion of the company’s debt. Ford’s debt is still 5 grades below investment grade, but after two upgrades in two weeks from Moody’s, you’d have to forgive optimistic investors who are hoping that one day soon Ford Motor will once again achieve Moody’s highest investment grade. At that point, the debt is considered the “smallest degree of risk,” which means money is easier to borrow at the lowest terms.
Not only is the company improving from a financial standpoint, but the quality of Ford vehicles was recently recognized, which helps boost the company’s profile with the car-buying public. At a time when competitors like Chrysler, GM, and Toyota are struggling, getting the highest grades for consumer quality is bound to help. Many industry experts have praised Ford recently for their product pipeline as their vehicle lineup has taken off with customers.
If all of these good news signs still don’t move you to invest in Ford stock, consider this: the automobile sector is expected to be America’s fastest growing industry in the next five years, given the country’s recent economic woes which caused such a massive reduction in sales for the auto makers. Now the consumer is coming back, getting financed, and increasingly choosing Ford Motor Co. products. That’s the type of trend anyone would love to see before they make an investment. Ford is now North America’s largest vehicle supplier by volume and the overall market is growing at the fastest pace of any industry! The trend is your friend and the trend for Ford remains up.
Right now Ford shares are trading for just under $14 as the price action consolidates.
Look for much higher returns in the next three months as long as the company continues to execute its plan.
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