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!

Why Is the Market Punishing Ford's Shares?

NEW YORK (TheStreet) -- The stock market is not efficient. All too often, poorly performing companies are rewarded when well-run, profitable companies are not.

Case in point: Ford Motor (F) over the past six months.

After issuing a profit warning in December for 2014 that the auto maker will only earn $7 billion to $8 billion in global pretax profit for the year instead of the $8.5 billion expected in 2013, Ford shares got crushed, falling over 10%.

Since then, shares have been stuck in neutral (pun intended) -- and for no good reason. At around $15.50, Ford shares are up nearly 9% for the past 52 weeks and slightly up for the year to date.

While this dropoff in profit is certainly significant, it is typical of Wall Street to overreact and start selling shares. Ford specifically said 2014 will be a transition year as it plans to unveil 23 new or remodeled vehicles compared to just 11 in 2013. It costs money to make money, and the fact that Ford is willing to invest so heavily in itself this year should be a positive sign for investors.

Further, since only 16 of those models will be available in North America, the company is making a clear effort in growing its international sales, specifically in China.

In fact, over the last two years Ford has quietly raised monthly sales in China dramatically from about 30,000 units in January 2012 to over 100,000 in March 2014. Although Ford's market share in China still trails those of the two largest foreign automakers -- General Motors (GM) and Volkswagen --  the company has made significant headway in a relatively short amount of time and is poised to grow further over the years.

To my mind, the popularity of Ford vehicles -- both in the U.S. and worldwide -- is nothing short of impressive. For the second year in a row, the Ford Focus was the number one-selling car in the world, helped by a 50% sales gain (year over year) in China. Meanwhile, in the U.S., the company's F-Series pickup trucks continue to be the most popular vehicle in America - and have been for decades.

Lastly, it should be noted Ford has a 50% market share in the police vehicle market, which it expects to maintain and even grow through its new Interceptor vehicle that will compete with the Dodge Charger and GM Caprice.

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 16,919.59 +80.85 0.48%
S&P 500 1,981.60 +9.86 0.50%
NASDAQ 4,527.5140 +19.2020 0.43%

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