By Jeff Reeves

Back in 2006, after posting a staggering $12.6 billion loss, Ford Motor Co. (F) knew it was in trouble. Deep trouble.

So the company crafted an ambitious turnaround plan. It closed more than a dozen plants, suspended its dividend and killed the storied Mercury name. Ford even took the drastic step of putting its entire brand up as collateral to restructure the company -- offering up trademarks like its iconic blue oval and the Mustang name to win over bankers.

It was quite a gambit, but it paid off. Because not only did Ford remain the only Detroit automaker to avoid bankruptcy in the wake of the financial crisis, but the automotive powerhouse is now trading above 2006 valuations.

And most importantly, Ford again has become healthy enough to take its world-famous logo out of the IOU bin, thanks to a stronger balance sheet and a credit upgrade Tuesday.

The headline was relatively ho-hum: Ratings agency Moody's raised Ford's debt ratings to "investment grade" for the first time in seven years. Its debt previously had been in a class that is kindly called "high yield" but more commonly known as "junk."

Anyone who has applied recently for a car loan or a mortgage with bad credit knows the burden that comes with an unfavorable rating. When you have a poor credit score, you have to pay extra -- in the form of higher interest rates or bigger payments up front.

That was the story with Ford. It needed money to restructure and change the scope of its business back in 2006, but banks weren't going to just give it an open line of credit to play with. The automaker was bleeding cash and had to show lenders they weren't going to get stuck holding the bag.

That's why Ford took the unprecedented step of putting its very brand in hock to get the cash it needed for a $23.5 billion loan that ultimately kept it out of bankruptcy.

Executive chairman Bill Ford, the great-grandson of company founder Henry Ford, told The Associated Press on Tuesday that giving up the rights to the oval was "enormously emotional for me personally and for my family."

No kidding. And it must be quite a relief to get the brand back in company hands.

So where does Ford go from here?

Well, consumers have been pretty pleased with the changes that the company has wrought since 2006. Ford won both car and truck of the year at the 2010 Detroit Auto Show for its Fusion Hybrid and Transit Connect van. Its European-styled Focus is appealing to small-car drivers looking for fuel efficiency, and it even offers a gas-free electric version that just started shipping to dealers. Oh, yeah, and those "built Ford tough" F-150s are still the best-selling truck for 34 years running.

Investors face a mixed bag, however. Yes, Ford is now sitting on $20 billion in cash and has reinstated its dividend at 5 cents a quarter for a roughly 2% yield annually. Revenue totaled $136 billion last year, up about 15% from 2009 lows and just shy of levels from before the Great Recession.

However, investors are less concerned with health than they are with growth. In its ratings outlook, Moody's said Ford's cars and trucks are increasingly competitive with those of Asian automakers, and it expects "robust" future products. But shares are down a staggering 40% since January 2011 because rivals General Motors (GM) and Chrysler finally have gotten their swagger back, Japanese automakers Honda (HMC) and Toyota (TM) have recovered since the brutal 2011 earthquake and tsunami that affected production, and Korean makers Hyundai and Kia continue to bolster their auto lines.

Throw in the fact that China auto sales are down for the year, showing softness in a market that has long been considered the biggest growth opportunity for automakers, and it's easy to see how tough the competition has become. Earnings for Ford in 2012 are expected to come in at their lowest level since 2009 as a result.

Investors should be warned that Ford has a tough path to growth in this environment. However, the good news is that the very real threat of failure has subsided. In its upgrade, Moody's said one of Ford's main strengths is its low break-even point in North America. Ford has to sell only 1.8 million vehicles domestically to turn a profit, and last fiscal year Ford shipped 2.7 million cars and trucks -- roughly 50% above break-even.

In short: The blue oval is safe and sound now that Ford is stable and profitable once more.

(Read more about what has happened to bailout funds for automakers GM and Chrysler.)

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace​​​.com or follow him on Twitter via @JeffReevesIP. As of this writing, Jeff Reeves did not own a position in any of the aforementioned securities.

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