Opinions
Rick Stuchberry
Volkswagen AG
VOW-GR
WAIT
Oct 22, 2013
Stock price when the opinion was issued
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He is not a big fan of car companies because they don't generate much free cash flow. Cap X is very high. He would prefers LFUS-Q. It makes all the fuses that go into electric vehicles.
He's buying this week's dip. These shares fell to $30, which is obscene compared to other carmakers. Overall, FedEx and Nike are talking about supply chain issues which he hears is worsening, not improving, as rising wages will narrow margins. So, he will likely return to high cash levels.
Not a huge fan. Reasonably well managed. Slowdown in EV buying, just as it's been ramping up its EV production. The field is getting crowded, and Chinese makers have the cost advantage. These factories take so many 10s of billions of dollars of investment, so if you don't get demand in a reasonable time, EPS suffers.
Auto companies haven't been great investments over the long haul.
The argument for this one is that the environment looks pretty good. Big sales in China and US sales are ramping up. The fleet is getting old, some say 13-14 years. Asia is a very important place to be. When he analyzed balance sheets he bought Tata (TTM-N) and Ford (F-N). They will all break out and do better. Wait for a pull back.