Opinions
Lorne Steinberg
Volkswagen AG
VOW-GR
DON'T BUY
Jun 27, 2024
$112.800
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.
Automotive
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.
Automotive
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.
Automotive
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.