2 More Reasons To Own Ford Motor Shares

  • GM’s expensive Hummer EV only helps Ford’s sales.
  • Ford’s self-driving ambitions are bearing fruit.
  • Ford stock ignored while GM gets the attention.
  • Looking for more investing ideas like this one? Get them exclusively at DIY Value Investing. Get started today »

In less than three weeks, Ford Motor (NYSE:F) shares continued their steady rebound, easily beating the S&P 500 (SPY). This short-term outperformance relative to the index is not yet a win for shareholders. Ford has another 15% in gains needed to get back to its yearly high.

Internal combustion engine (ICE) suppliers are benefiting from the news that used car sales are up. The demand for new vehicles is higher. This is due to consumers spending their stimulus check. AutoNation’s (NYSE:AN) strong quarterly report suggests that the momentum for automobile sales will continue rising.

There are two more reasons investors should continue holding shares after they bounced from around $6.50 to trade at $8.15 recently.

Below: The recommendation to buy the stock before it kept rising paid off, for now.

Source: SA Premium

General Motors Misprices Hummer

On Oct. 21, General Motors (NYSE:GM) said that it will mark its entry into electric vehicles with a Hummer EV. The sports utility vehicle will start at $112,595. A less expensive version will come out a year after that at $99,995. This approach is a copy of Ford’s Mustang Mach-E pricing model. Ford is launching the First Edition and premium models first later this year. It originally priced the First Edition at $61,000. The Premium model will start at $51,700.

All models are eligible for the $7,500 federal tax credit.

Ford will introduce the Select, which starts at $44,995, in spring 2021.

GM’s initial pricing is almost double that of the Mach-E. Though the Hummer is iconic for its weight, high consumption of gas, and luxury class, the company faces tough competition ahead. Tesla’s (NASDAQ:TSLA) Model Y costs only $49,990 to start (click on “purchase price” to remove the potential savings). Model Y will accelerate from 0-60 mph in 4.8 seconds. To GM’s credit, the Hummer will get there in three seconds.

The Hummer EV’s 1,000 horsepower and 11,500 lb.-ft of torque are impressive, too. Tesla’s Cybertruck, which starts at $39,900, is more affordable and also has a better range of over 500 miles. Together with Ford, the two firms should have no problem taking GM’s EV SUV sales.