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Ford Bronco: Just What Ford Needs to Make It a Buy (NYSE: F)

Tuesday, July 14, 2020 | Steve Anderson
Ford Bronco: Just What Ford Needs to Make It a Buy (NYSE: F)

Somewhere between “major international corporation,” “scrappy local success story”, and “beleaguered dinosaur” lies Ford (NYSE: F), a company that's been making history for decades but is increasingly under fire from a growing range of competitors. As other corporations have before it, it's turned to its past to inspiration on its future, and brought back the Ford Bronco. That's a name that's weighted with history to it, for both good and ill, but what will it do to Ford's share prices?

The Ford Bronco: A Problematic History at Best

The word “problematic” is probably well on its way to being tossed bodily out of the lexicon as an overused cliché, but in this case, it works better than you might expect. Before 1994, the Ford Bronco was ahead of its time. It foresaw the rise of the sport utility vehicle (SUV) market, and was actually offered as far back as 1965. It underwent five separate generational changes, though it was midway through the fifth generation, which ended in 1996, where the model was finally shut down.

It would be easy here to blame the 1994 low-speed police chase featuring sports icon and actor O.J. Simpson for ultimately destroying the brand and associating it forever with the deaths of Nicole Brown Simpson and Ron Goldman. As it turned out, however, the two-door Ford Bronco's popularity had been in decline for some time, and the model was ultimately phased out to allow two of Ford's biggest model releases ever—the Explorer and the Expedition—to fire up in earnest. There was even some suggestion that the infamous O.J. case may have given the brand a bit of new life for a while.

Ford Bronco: Just What Ford Needs to Make It a Buy (NYSE: F)

The Revived Bronco, However, Meets With Accolades

It would be just as easy to dismiss the Ford Bronco's revival as an attempt to cash in on the infamies of the past, with Ford basically trying to launch a car line with built-in notoriety. However, the most recent reports of the 2021 Bronco suggest that this is no mere cash grab; Ford put a lot of engineering into this little SUV.

Several technical features have been cited in the development of the Bronco that make it an attractive buy.  Capitalizing on past assessments of the Bronco as a “Go Over Any Terrain” vehicle, or GOAT, Ford actually trademarked the term GOAT for its “GOAT Modes” system. GOAT Modes are essentially macros for various power train and transmission functions, allowing the vehicle to best handle certain types of terrain by adjusting front and rear differential, the front anti-roll bar, and several others. There's an Eco mode for reduced fuel consumption, a Sand mode for the obvious, a Slippery mode, and even a Rock Crawl mode.

Some comparisons have been made between the new Bronco and the previous Ford entry into the small SUV stakes, the Ford Escape, but the Bronco has more than sufficient extra features—and purposes—to distinguish itself clearly from the more straightforward entry. Those interested in picking one up will need to come prepared; the lowest-cost version, the Bronco Sport base model, comes in at $28,155, and the price goes up from there based on model and options.

A Big Draw in an Ever-Tightening Market

It sounds like an attractive enough car, but what will this do for Ford's stock price? The good news is that this seems to be exactly what Ford is going to need going forward. Ford was already under fire from the usual suspects in the automotive market, like GM (NYSE: GM) and Fiat-Chrysler (NYSE: FCAU). With electric vehicles starting to make a huge push as seen by current leader Tesla (NASDAQ: TSLA) and upstart Nikola (NASDAQ: NKLA), Ford needs to make its presence known in a big way to keep interest alive. What better way to do that than to bring back perhaps the most notorious car line since Stephen King made a Plymouth Fury into a homicidal murder machine? Sure, some of that notoriety has boiled off as a natural consequence of being generated nearly two decades ago, but it's likely still got something under the hood, especially for the over-40 crowd.

The coronavirus lockdowns certainly didn't help matters, but there are some new signs of life. Prices were crushed as customers stayed away from every used car lot in droves. With signs that customers are throwing over public transit—staying locked in a big metal tube with dozens of strangers for any length of time is seeming unattractive—for private cars, however, that could bring new life to the entire sector, and Ford with it.

Throw in the fact that the new Bronco is a clear off-road powerhouse that looks sharp—opinions will, necessarily, vary on that point—and the combined picture is a Ford that should pull in some interest. It's hard not to like Ford, in both its vehicles and its stock price, and both look like increasingly attractive buys in a market full of other options.

Companies Mentioned in This Article

CompanyBeat the Market™ RankCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
General Motors (GM)2.7$27.82-0.7%N/A26.50Buy$34.75
Fiat Chrysler Automobiles (FCAU)1.4$11.56-0.8%N/A-12.43Buy$16.00
Tesla (TSLA)1.5$1,636.85+5.3%N/A852.53Hold$850.06
Nikola (NKLA)0.0$45.78+6.9%N/AN/ABuy$56.00
Compare These Stocks  Add These Stocks to My Watchlist 

The Next 5 Retailers on the Edge of Bankruptcy

Through no fault of theirs, the novel coronavirus has put some retailers on the edge of bankruptcy. And as you’ve seen, many have fallen over that edge including iconic names like Nieman Marcus, J.C. Penney and J.Crew.

In fact, according to the American Bankruptcy Institute, there were 560 commercial Chapter 11 filings in April. That was a 26% increase over last year. And executive director, Amy Quakenboss, suggests that there are more to come.

“As financial challenges continue to escalate amid this crisis,” observes Quakenboss, “bankruptcy is sure to offer a financial safe harbor from the economic storm.”

With no revenue walking through the door, many retailers are seeing a semblance of revenue from e-commerce sales. But for some retailers, the shutdown is more impactful because they didn’t have a strong e-commerce structure. That means that they rely more than others on brick-and-mortar sales.

The real question now is will there really be the pent-up demand that some analysts still swear is just waiting to be unleashed. It may indeed exist. Time will tell. But time is not a commodity many of these retailers have. And we’ve identified five retailers for which the clock is not in their favor.

View the "The Next 5 Retailers on the Edge of Bankruptcy".

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