Lorne Steinberg
Volkswagen AG
VOW-GR
DON'T BUY
Jun 27, 2024
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.
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.
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.
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.
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.
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.
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.
Your Watchlist
Add stocks to watchlist to monitor them daily and get important alerts.
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.