Ford Motor Company is our pick of the week. Since we released the Most Attractive Stocks list in November, in which Ford was ranked 6th out of 20 large cap companies, Ford’s stock price has increased nearly 13%.
Ford has high quality earnings along with a cheap valuation, which places it back on the Most Attractive Stocks list for December. Even at its current price of ~$16/share, F has a price to economic book value (PEBV) ratio of 0.9. This ratio implies that the market expects Ford’s after-tax profit (NOPAT) to permanently decline by 10%.
This expectation does not coincide with the actual economics of the company, and we believe that Ford is well positioned to excel due to its attractive product lineup. Investors who buy F will be well positioned to profit from this textbook value-investing scenario.
Kyle Guske II contributed to this report.
Disclosure: David Trainer owns F. David Trainer and Kyle Guske II receive no compensation to write about any specific stock, style, or theme.