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Thursday, January 27, 2011

Take a ride in the Ford Fusion

Ford reports earnings tomorrow morning before the market opens. Expectations are high for Ford with analysts expecting results from Ford not seen since 2000.

I am long F 2012 $25 and  2013 $30 LEAPS because they are cheap ways of participating in any ford upside for the next two years and they costs about $100 vs almost $19/share.

Drive me to the land of bread and honey!


Ford reported their best annual profit since 2000. Ford's FY net income came in at $6.6 billion or $1.66/share. The fourth quarter income came in lower than anticipated, mainly due to higher commodity costs, one time refinancing charges, and increased advertising on new product launches. Also in 2010, Ford improved its balance sheet and paid down $14.5 billion in debt. Ford still has a substantial debt load at $19.1 billion, but reduced its debt service costs by $1 billion annually.  But the company still ended the year with more cash than debt, something it has not done since 2006.

Due to the earnings miss in the 4th quarter, F was pummeled by short-term speculators and momentum investors. Shares are down over 16% since the earnings announcement. This is a good time to average down on F. I purchased more $25 leaps, a $20 leap, and a 17.50 leap. Also, you might look at selling $15 leap puts to get Ford shares at even more attractive prices in the future!


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