Ford Stock Is Trading Below $10: Should You Buy It Hand Over Fist Right Now and Hold for 20 Years?

Neil Patel, The Motley Fool

Tue, Apr 22, 2025, 2:05 AM 4 min read

While monster technology enterprises draw all the attention, it's worth pointing out that Ford Motor Company (NYSE: F) was once considered the bellwether of the American economy. It was founded in 1903, and its history highlights customer interest in the vehicles the business offers, namely its pickup trucks and SUVs.

This Detroit auto stock is currently trading below $10 per share. Does this mean investors should buy it hand over first and hold for 20 years?

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Valuation is one of the most obvious reasons to scoop up shares today. While traditional mass-market automakers don't typically trade at high multiples, some investors may view Ford's current setup as a fat pitch.

As of April 17, the stock sells for a price-to-earnings (P/E) ratio of 6.6. In comparison, the S&P 500 index trades at a P/E multiple of 21.4, more than three times as expensive as Ford. This reveals the market's overall weak sentiment toward the company. However, even reaching a P/E ratio of 10 introduces 52% upside for prospective investors.

The cheap valuation naturally leads to a high dividend yield of 6.23%, which is notable for some investors who favor companies that cut them a check every quarter.

Another reason to be bullish on the business is the success of Ford Pro. This is the segment that serves professional customers with certain vehicles, software, and maintenance. Management is aiming to drive more "recurring, high-margin, noncyclical revenue" with this division, according to CFO Sherry House. Ford Pro increased sales by 15% year over year in 2024 to $66.9 billion, while generating operating income of $9 billion.

Ford's valuation might be low for valid reasons. The stock's track record is wildly disappointing. Even including dividends, shares produced a total return of just 1% in the past decade and 97% in the past 20 years. Had you simply invested in an S&P 500 exchange-traded fund, your portfolio would've done substantially better.

It's easy to be pessimistic about the stock's future. It all comes down to some very adverse characteristics for Ford.

The global auto industry is extremely mature. As a result, there isn't much growth potential. Ford's revenue isn't going to rise meaningfully. In the U.S., the company's most important market, 18.2 million vehicles were sold in March on a seasonally adjusted annual basis. That number has barely budged from 10 or 20 years prior. That doesn't give investors much to be excited about.