Would You Bet Against Ford?

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Ford truck grille

There's an interesting choice facing Ford investors right now.

Sell some stock and take profits after a spectacular run-up in the last year, or hang on and bet that Alan Mulally and company can prove Wall Street wrong again and outperform expectations, pushing the stock even higher.

So far, the folks selling are winning out, but this is hardly a case of people giving up on the Ford story.

Consider the following:

* Since reporting earnings Tuesday, Ford shares are down 7%

* The Stock is up 140% in the last year. So if you plunked down $10,000 last May (when the stock traded as low as $4.71), you are now sitting on more than $30,000. Nice return in one year.

* Some on Wall Street believe Ford's earnings power has peaked for this year, though many believe the company's long-term growth prospects are strong.

So there is the rub for Ford investors.

It really comes down to whether or not you think Ford's sales and profits will continue to grow in the years to come. And while nobody can predict the future, there are so many factors in Ford's favor that it's reasonable to expect the Mulally "makeover" of Ford to continue to work.

* Auto sales will slowly grow over the next three years. Unless the economy falters, the annual sales rate should grow from around 11.5 million this year to up around 13 million by 2012. If that happens Ford will benefit.

* Ford's new product cadence is strong. The Fiesta comes out later this year, the new Focus is on the way next year, and there is an all new Explorer in the pipeline. So the new models will be there. More importantly, Ford's styling is connecting with buyers right now. That as unlikely to change anytime soon.

* Ford has the mojo right now and its competitors don't. Momentum is crucial to winning over buyers. Unless Ford stumbles on the quality or design front, it will be able to not only compete, but also win over some buyers from Toyota and GM.

Personally, I'm not surprised Ford shares are pulling back. Will they drop another $4.00 to around $10.00 a share as some believe is more reasonable price? I don't think so. I could be wrong, but in this game whether or not to bet against Ford, my gut says the stock may trade sideways or slightly lower near term. But longer term, I don't think this is the peak for the blue oval.

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