You can’t blame investors for bagging profits on big winners. Many investors that bought into Ford Motor Co. (NYSE: F) back when shares traded for the price of a Big Mac have been exiting the stock recently as it looked like the fast gains had been made. But for those focused on the long-term, the recent -20% drop in the stock creates an opportunity to jump in before shares post their next round of gains.

Much ink has been spilled about Ford’s impressive management team led by CEO Alan Mullaly. They had exquisite timing in 2008, leveraging every asset the company had to raise cash, right before the economy contracted. Had they not done so, Ford would likely have needed to declare bankruptcy along with its beleaguered peers in Detroit. Even more remarkably, Ford didn’t skimp on product development spending even when money was tight, and is now bearing the fruits of that gutsy move.

To be sure, Ford’s car and truck plans are the keys to this stock. As investors saw the strong promise of its new Focus, Fiesta and Taurus models, along with solid quality ratings from Consumer Reports and J.D. Power, they pushed shares up towards a 52-week high. More recently Ford has been quiet about product development plans, and shares have begun to drift lower. Yet Ford is expected to talk about its next group of new vehicles in coming months, most notably a refreshed Ford Explorer.

Consumers may have lost interest in SUVs, but the new Explorer will be what is known as a CUV, or Crossover Utility Vehicle — think the ruggedness of a truck and the frugality of a car. Plans for a 4-cylinder turbocharged engine shows that Ford now knows that a reliance on thirsty, large vehicles no longer makes sense. Production is set to start later this year.

A year from now, Ford will start selling electric-only versions of its Transit Connect minivan and Focus. It’s hard to gauge potential demand for these vehicles, but Ford insists they will be far cheaper than GM’s much-heralded Chevy Volt.

As Ford refreshes its line-up and continues to rack up impressive quality ratings, customers are starting to return. The auto maker had seen its U.S. market share slip from 20% in 2003 (when pickup trucks and SUVs were in vogue) to just 14% in 2008. Since then, market share has steadily risen to 17.3% as of May.

The key variable for analysts is where market share will be in a few years. Many have long assumed that the Japanese and Korean auto makers had made permanent market share gains at Ford’s expense. They figure Ford will control 15% of the U.S. market. But what if Ford’s recent market share gains can be sustained and can trickle a bit higher to 18% by 2012? That would force analysts to once again boost their profits forecasts (which they have been steadily doing for much of the past two years).

Profit Potential

Thanks to the recent pullback, shares of Ford trade for less than 10 times projected 2010 profits and seven times projected 2011 profits. Looking further out, Ford is leveraged to even higher profits — if auto sales continue to rebound. Back in the middle of the last decade, U.S. consumers bought 17 million cars and trucks every year. That figure fell below 10 million last year, but is slowly creeping back up. Analysts expect the industry to move 11.0 to 11.5 million units this year, and 11.5 to 12.0 million units next year.

Ford has cut its expenses so sharply that it no longer needs a booming industry to show sharp profits. If Ford could simply maintain its current 17% market share, and annual unit sales approach 14 million units, then domestic operations alone could throw off about $3 a share in net profits.

Domestic sales account for just half of sales, with a little more than a quarter of sales coming from Europe and about 20% from the rest of the world. The European economic slide likely means that Ford would be glad to break even in that market during the next few years. If and when the European economy rebounds, it would only add to Ford’s profitability.

Remaining Hurdles

Despite the impressive turnaround, Ford is not out of the woods. The auto maker will need to either refinance or pay off $6.7 billion in revolving loans and $5.3 billion in term loans by the end of 2013. That shouldn’t be a problem if the economy stays on its feet, but if we are hit with another sharp recession and credit markets tighten up, then Ford will need to sell more stock. Recent equity offerings have been the one clear headwind for the stock. When management can finally come out and say that all future debts will be paid out from cash flow or simply rolled over, shares should post an impressive rally.

Action to Take –> Once investors are clear about any remaining dilution, they should start to focus on the potential $3 a share in earnings power. Assuming shares trade up to eight times that figure, then they would double from current levels.

The next leg up in the stock won’t happen in meteoric fashion as we saw in 2009, and it may be several years before shares trade up to that target. But despite the impression that the recent pullback may give, this is a company with an excellent management team and a well-regarded product line-up in an industry that is just getting back on its feet.