How Jim Cramer Would Play Ford Stock Ahead Of Q3 Earnings

Ford Motor Co F made new 52-week highs during Thursday's session following positive analyst coverage on the stock this week.

What Happened: Credit Suisse analyst Dan Levy upgraded Ford from Neutral to Outperform and raised the price target from $15 to $20.

The Credit Suisse analyst cited a significant turnaround underway at Ford. The company is no longer reporting disappointing quarterly results and has accelerated its transition to electric vehicles and the digital world, according to Levy.

JPMorgan analyst Ryan Brinkman also said he's positive on Ford ahead of earnings next week. The analyst announced a December 2022 $20 price target on the stock. Brinkman expects Ford to benefit from a strong pricing environment and solid production numbers.

Related Link: Ford Analyst Says 'Significant Turnaround' Is Underway At The Detroit Automaker

Why It Matters: "We would be trimming Ford and right-sizing the position into today’s strength if we were not restricted from trading," Jim Cramer said in a letter to members of CNBC's "Investing Club."

"Right-sizing" the position refers to reducing the weighting to a level that is more in line with other positions in a portfolio.

"Even though we tend to agree with the long-term thinking of the analyst calls, we think it is only right to capitalize on this cluster of positive analyst activity by trimming our position."

Cramer told "Investing Club" members he's concerned sentiment may have become too positive ahead of earnings. He prefers to buy stocks with solid fundamentals when sentiment becomes too negative, he noted.

The Detroit-based automaker is set to report its third-quarter financial results after the market closes on Oct. 27.

Despite announcing intentions to trim his Ford position, Cramer said "we remain huge believers in the turnaround orchestrated by CEO Jim Farley."

F Price Action: Ford is up more than 85% year-to-date. The stock closed up 3.1% at $16.55.

Photo: courtesy of Ford.