With auto sales on the rise, there is good reason to believe that GM will be greeted kindly by the public after its IPO. For those investors seeking an American automaker with less risk and a better track record, you are well advised to take a close look at Ford. Ford shares have risen more than 40% this year.
It is expected that GM will steal some thunder from Ford by way of the impending IPO, but investors who are in for the long-term shouldn’t be scared off. “Clearly some institutional money will be pulled out of Ford,” said Steve Dyer, an analyst with Craig-Hallum Capital in Minneapolis. “But Ford is a better-run company with a much better lineup of vehicles.”
While getting primed for an IPO is traditionally a solid sign in the business world, it loses its luster in this situation a little bit when one bears in mind that the only reason GM has to re-enter the market is because it was delisted after the massive government bailout and ensuant bankruptcy. Ford has remained solvent and self-sufficient throughout the entire economic crisis.
Ford reported last week a record third-quarter profit of $1.7 billion, caused primarily by growing sales. This is crucial as it demonstrates that Ford’s profit growth is real, and not merely an illusion created by a staunch slashing of expenses. The company has also demonstrated growth in market share as rivals like Toyota and Chrysler struggle.
Some analysts are still skeptical however, that Ford is the major catalyst of its growth, but others still give Alan Mulally a ton of credit, for the improvements he has made.
– By: Stephen Calogera