This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Ford Shares: How to Build Your Position

NEW YORK (TheStreet) -- Shares of Ford (F) have backed off the highs they hit earlier this month, but they're still up more than 13% this year.

Earlier this year I advised Ford investors to sell covered calls against their positions.

As with any "contrarian" call, this was met with great skepticism. Many people did not seem to understand my advice, and I took a lot of flack for it.

Ford is a great company. The fundamentals are solid. The stock was breaking out. Auto sales were perfect. So why did the stock fail to get to more than $16?

Easy. Europe.

But Ford, along with General Motors (GM), is a rather easy stock to trade, because you never need to chase it. Let me repeat that: You never need to chase it!

Envision Ford as a boat, rather than an automaker, and picture Europe as an anchor. Anytime you begin driving a boat, it's easy going until you run out of slack on your anchor line.

Then all of a sudden the boat hits the end of that line and gets stopped. That's exactly what it's like with shares of Ford. You might see the stock run up on monthly sales figures but then sell off afterwards.

The good sales data -- or as of late, great sales data -- typically get baked into the stock price prior to the release. At this rate, a blowout number from automakers is generally expected. An in-line result or a disappointing one would send the stock right back down.

Although Ford is improving in Europe and CEO Alan Mulally still says the company is on pace to be operating with breakeven results by mid-decade, the automaker still lost more than $450 million in the region last quarter.

That's not exactly a promising figure considering it leaves the automaker on pace to lose nearly $2 billion in Europe for 2013. So by Mulally's estimates, Ford will likely lose about $1 billion there in 2014, perhaps a tad more. After all, mid-decade is a pretty broad measure.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,040.55 +1.06 0.01%
S&P 500 1,990.05 -2.32 -0.12%
NASDAQ 4,528.5640 -3.54 -0.08%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs