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Is Ford Motor Company (F) a Good Robinhood Stock to Buy?

We recently compiled a list of the 10 Best Robinhood Stocks Under $20. In this article, we are going to take a look at where Ford Motor Company (NYSE:F) stands against the other Robinhood stocks.

The market reacted favorably after the Federal Reserve’s June 11-12 meeting. The broader market marked record closes. At the June 12 press conference, Fed Chairman Jerome Powell emphasized the Fed's focus on its dual mandate of achieving maximum employment and stable prices. While the labor market remains strong with continued job gains and low unemployment, inflation has decreased significantly from its peak but remains above the 2% target, currently at 2.7% and the Federal Open Market Committee (FOMC) believes it's still high.

Key Developments

The Fed Chairman reported that GDP growth slowed from 3.4% in Q4 of 2023 to 1.3% in Q1 of  2024. However, underlying demand indicated by private domestic final purchases grew at 2.8%. Consumer spending has moderated but remains solid, and investment in equipment and intangibles has improved. Moreover, the labor market is balanced, with job gains averaging 218,000 per month in April and May, and the unemployment rate was at 4%. Inflation, as measured by PCE prices, rose 2.7% over the past year, while core PCE rose 2.8% and the CPI rose 3.3% in May, with the core CPI at 3.4%. Finally, the FOMC decided to keep the federal funds rate unchanged at 5.25% to 5.5% and to continue reducing securities holdings to manage inflation.

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Powell emphasized a cautious approach to policy adjustments. The Chairman said that while some progress has been made toward the inflation target, more data is needed to ensure inflation is sustainably moving toward 2%. The Fed will continue to assess economic data and adjust policies as needed to support their dual mandate. He reiterated the commitment to restoring price stability to ensure long-term economic health. The Fed chair noted that the median projection for the federal funds rate by FOMC participants is 5.1% by the end of 2024 if the “economy evolves as expected.” Nevertheless, Jerome Powell highlighted that the projections are not a guarantee and will depend upon the data in the coming months.

The CME’s FedWatch tool reveals that 35.8% of the market expects the interest rates to remain the same in September, 59.2% expect a 25 basis points (bps) reduction, and 5% believe in a 50 bps rate cut. These numbers have risen significantly in favor of rate cuts since we reported them on May 31 in our article about the best up-and-coming stocks.

After a long wait, the Fed has finally hinted at potential rate cuts in September, which brings tons of opportunities in the market. Let's take a look at some now.

Our Methodology

For this article, we used the app to identify over 100 stocks with a $2 billion market cap that were trading under $20, as of June 12. We narrowed down our list to the stocks with positive hedge fund sentiment, analyst ratings, and optimistic prospects and chose the 10 stocks with the highest number of institutional investors.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A Ford truck roaring down a highway, with powerful headlights blazing its way.

Ford Motor Company (NYSE:F)

Number of Hedge Fund Holders: 41

Share Price as of June 12: $12.08

Ford Motor Company (NYSE:F) is a Michigan-based company that is engaged in the development, delivery, and servicing of a range of trucks, commercial cars and vans, sport utility vehicles, and luxury vehicles. The company is one of the best Robinhood stocks under $20 and provides its vehicles under the Ford and Lincoln brands.

On June 4, Ford Motor Company (NYSE:F) announced its May sales figures with US vehicle sales increasing 11% from a year-ago period to 190,014 units. Electric vehicle sales were up 64.7% and hybrid vehicle sales grew by 64.5% to 8,966 and 17,631 vehicles, respectively.

Ford Motor Company (NYSE:F) is one of the most dominant players in its respective industry and it is one of the top 5 stocks Democrats and corporate Insiders are buying. The company has an impressive balance sheet with $25 billion in cash and close to $43 billion in liquidity. The recent renewal of $18 billion in corporate credit facilities further strengthens Ford Motor Company’s (NYSE:F) financial flexibility. On top of that, the company has a strong focus on shareholder returns. It is committed to returning 40% to 50% of adjusted free cash flow to shareholders, along with a regular quarterly dividend. As of June 12, the company has a dividend yield of 5.1%.

Ford Pro is one of the key growth drivers of Ford Motor Company (NYSE:F). In Q1, Ford Pro's revenue surged by 36%, with a 21% increase in wholesales. The segment delivered an impressive EBIT of $3 billion, with a margin of 16.7%. This growth is fueled by increased production and a richer mix of Super Duty and Transit vehicles, along with higher net pricing. Additionally, software and physical services now contribute 13% to Ford Pro's EBIT, with expectations to reach 20% in the coming years. This high-margin revenue stream shows Ford Pro's long-term growth potential.

As of Q1, 41 hedge funds held stakes in Ford Motor Company (NYSE:F), with positions worth $1.54 billion. As of the first quarter, Fisher Asset Management is the biggest shareholder in the company and has a position worth $830.301 million.

Overall F ranks 7th on our list of the best Robinhood stocks to buy. You can visit 10 Best Robinhood Stocks Under $20 to see the other Robinhood stocks that are on hedge funds’ radar. While we acknowledge the potential of F as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than F but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

Read Next: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.

 

Disclosure: None. This article is originally published at Insider Monkey.