It’s time to buy stock in Ford Motor F .
That’s the verdict of Adam Johnson, author of the Bullseye Brief financial newsletter.
“My target of $23 would represent a doubling from current prices and is quite achievable,” he writes in a recent edition of the report.
The stock recently fetched $11.35.
Johnson lists multiple reasons for buying, including the company’s strength in the electric vehicle (EV) market with ambitions of being the top American producer by 2026 . He writes as follows:
- “Ford highlighted numerous catalysts at last week’s Analyst Day, an event aimed at attracting the institutional support need to propel the stock to new highs. Electric vehicles were showcased as a way to boost sales, expand margins and increase share. Like all auto makers, Ford’s ambitious plans impact all aspects of the company, from supply chains to software, connectivity to sales.”
But perhaps even more important, Johnson doesn’t forecast a recession over the next two or three years. That makes sense as inflation is cooling and the Federal Reserve will not increase interest rates much more. (Also, despite false reports of an imminent recession for nearly a year the economy remains robust.)
The auto business is cyclical and highly sensitive to moves in the cost of borrowing money and the unemployment rate. But with the economy looking strong and the Fed likely to back off its war on inflation, it makes sense to bet on continued growth for the automaker, especially one likely to gain share in the EV segment.
Johnson assumes total auto sales lift from a recent 17.5 million a year to 18 million based on unfilled demand and growth in the overall population. Plus he sees the company gaining a 15% EV market share up from 14%.
Along with some cost savings from producing more EVs and increased share, Ford’s profits should grow and help lift the stock price, according to Johnson’s analysis.
Of course, it doesn’t hurt that the stock yields almost 5% as well.