According to Robinhood, a stock-trading app popular with younger investors, millennials (those between the ages of 22 and 37) were most intrigued by tech and pot stocks in 2018. Seven of the top nine portfolio additions made by millennials last year were cannabis or technology stocks, including Amazon.com, Inc. (NASDAQ: AMZN), Microsoft Corporation (NASDAQ: MSFT) and Canopy Growth Corporation (NYSE: CGC).
But arguably the most interesting name among the top millennial holdings was a company that was founded during what some have called the “G.I. Generation”.
Ford’s Stock Is Back On Track
The brainchild of Henry Ford, the Ford Motor Company (NYSE: F) was incorporated on June 16, 1903 — with 12 investors and 1,000 shares outstanding. From those humble roots, the company has grown to be one of the largest automobile manufacturers in the world, currently ranking second in the U.S. behind General Motors Company (NYSE: GM), that even made airplanes (nicknamed the “Tin Goose”) from 1925-1933.
And, this year, after a decade of decline (F stock is down 17.9% in equity value after adjusting for dividends and stock splits since the end of 2010), Ford is making a comeback.
F is up 37.4% in 2019 thanks, in large part, to a renewed focus on the future. Jim Hackett promised a “redesign” of the company’s global business when he was named CEO on May 22, 2017, and, at least so far, he appears to be sticking to his word.
Ford reported earnings of 44 cents per share in the first quarter of this year — blowing away analysts’ estimates of 26 cents per share. This earnings surprise was paced by much-improved sales in the Middle East and Africa and better-than-expected results in China, where the automaker has generally made a mess of things in the past. (There is a new management team in place in China — one with “far more local knowledge and expertise” than in the past, according to John Roosevear of The Motley Fool — and it has clearly made progress, based on the Q1 results.)
Ford Focused On The Next Generation
Perhaps more importantly, Ford appears to be finally getting serious about next-generation vehicles.
Luke Lango of InvestorPlace points out that the company is seeking to develop “40 hybrid and electric vehicle models by 2022, the sum of which should help Ford hold its own in the electric-vehicle market.
“Further, Ford is a leading player in autonomous driving, and it just agreed to partner with Volkswagen (OTC: VWAGY) on self-driving technology,” Lango says.
Granted, the iconic carmaker still faces significant roadblocks in its quest to regain market share. Car ownership is down as a result of higher (real) costs — in the 60s and 70s, a Chevrolet Malibu cost about 7-10% of the median household income, whereas a compact car today commands about 35% of that income — and the increasing popularity of ride-sharing. Hence the reason Ford showed a 14% increase in profits despite a 5 percent dip in sales in North America last quarter.
Nonetheless, Ford’s first-quarter results were considerably better than those for rival Tesla (NASDAQ: TSLA), which continues to be unprofitable and reported worse-than-expected deliveries and free cash flow of negative $920 million.
If Ford can stay focused, F stock might show a positive ROI for only the second time since 2015.