It's hard for Ford Motor Company (NYSE: F) to escape the cutthroat nature of the mass market car industry. Plus, changing macroeconomic conditions can make things difficult. It seems that consumer confidence, interest rates, and gas prices have worked against the business at times.
This helps explain why, over the past four years, the share price has fallen 12% (as of Aug. 17). But Ford has benefited from heightened investor interest recently. The automotive stock has climbed 23% in the past 12 months.
Investors are bullish on Ford Energy, a new segment announced in May that plans to sell battery systems to various customers, capitalizing on the surge in demand for grid storage. This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Maybe the winning performance will continue for investors. Or perhaps this company will keep lagging the overall market, as it has historically.
Can Ford stock reach $30, up 114% from its current price of about $14, by 2030? Investors shouldn't mistake Ford's longevity, having been in operation for well over a century, as a sign that this is a high-quality company. The Oracle of Omaha's thinking shapes this perspective.
Warren Buffett, who many consider the greatest capital allocator ever, is known for favoring so-called compounders. These businesses have ample opportunities to reinvest capital in growth initiatives. And they do so because they can generate high returns on invested capital.
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