Opinions

Stephen Weiss, Founder, Short Hills Capital Partners Volkswagen AG VOW-GR BUY Sep 08, 2022

Trades at half the valuation of GM and Ford, yet much further along in EVs.

Stephen Weiss, Founder, Short Hills Capital Partners

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$191.700

Stock price when the opinion was issued

Automotive

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DON'T BUY

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.

DON'T BUY

Huge run on EV announcement. All of the major car companies are heavily discounted, but they're all transitioning into EVs. Tesla won't be the only game in town. A bit rich. Do your own research and look to other names.

BUY ON WEAKNESS

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.

HOLD

Good global presence, including China. He wouldn't count on penetration in China, as domestic makers are favoured. Not as strong as others. TSLA has the lead in EV, and he doesn't think anyone will catch up. Good company that will do fine over the long term.

BUY

He believes they will spin out Porsche and this will add heavily to their market cap.

BUY ON WEAKNESS

Every time it hits $27, shares bounce. They may have a big announcement, separating Porsche, at the end of March.

BUY

A market bounce underway? Be cautious. Not all the market negatives are known. He predicts China will at some point still go after Taiwan. Russia does not have a big impact on the U.S. economy, but China does. Volkswagen has gotten cheap at 4-5x earnings and is a great buy. Similarly, FedEx at 10x earnings is a great buy. It's been bouncing off last week's earnings and he bought right after that report. Yes, stocks rise as interest rates do, but margins will be hit because of inflation and rising costs. It's a stockpicker's market.

BUY

Volkswagen is a really good opportunity for a value investor. Growing rapidly in EV space, one of the global leaders, owns luxury brands. Will take patience for clouds to dissipate around higher costs of production in Germany.

DON'T BUY

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.

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Stephen Weiss, Founder, Short Hills Capital Partners Volkswagen AG VOW-GR BUY Sep 08, 2022

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