Should you buy Ford shares after investing $11 billion in EV production?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Sep 28, 2021
  • Ford shares gained 2% on Tuesday after disclosing an $11 billion investment in EV production.
  • It launched two new factories in the Southeast to make batteries and up to a million EVs a year.
  • The investment is part of Ford’s plan to have 40% of global sales coming from electric vehicles by 2030.

On Tuesday, Ford Motor Co. (NYSE:F) shares edged higher 2% after revealing an $11 billion investment plan that will allow the company to make legions of batteries and over a million electric vehicles a year.

The investment is part of Ford’s grand plan to have at least 40% of its global sales coming from electric vehicles. It is opening two factories in the Southeast to boost its electric pickup trucks business, a key component of its EV plans.

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And in living up to its goal of becoming an environmentally friendly manufacturing company, Ford plans to use recycled water, and will not send waste material to landfills. The company wants to become 100% zero-carbon by the year 2050.

Ford stock looks undervalued

From an investment perspective, Ford shares trade at an attractive forward P/E ratio of 6.59, making the stock attractive to value investors. Furthermore, analysts seem optimistic about its growth prospects, with earnings growth projections of about 290% this year.

They also expect the company’s bottom line to grow at an average annual rate of 72% over the next five years. Therefore, although Ford is making some significant financial commitments, it seems its bottom line will be good enough to give it the flexibility in needs in its transition to a 100% zero-carbon company.

Therefore, it could be time to buy Ford stock and join the company’s exciting growth story.

Source – TradingView

Bull run continues after the breakout

Technically, Ford shares appear to have recently completed a bullish channel breakout, resulting in a sharp rise in the stock price. Moreover, the share price has since rallied closer to the overbought conditions of the 14-day RSI.

However, given Ford’s exciting earnings growth prospects, the company has catalysts to continue fueling the current bull run.

As a result, investors could target extended gains at about $15.49 or higher at $16.43. On the other hand, $13.43 and $12.47, are crucial support zones.

There is time to buy Ford shares

In summary, although Ford shares have recently spiked closer to the overbought conditions, the current bull-run seems to have robust momentum that could push the price higher. 

Moreover, with the recent investment signalling progress in Ford’s plans of becoming a zero-carbon company, more investors will be looking to buy the stock.

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