Stellantis Stock Analysis: The Best EV Stock to Buy in 2024? Dividends + Value + Growth | NYSE: STLA
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- Опубликовано: 17 июн 2024
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Despite pretty much doubling in the past year and a half, Stellantis (NYSE: STLA) is even now relatively cheap, and as you are about to see, they seem to be in a very good position to do well in the future.
Since the FCA - PSA merger, Stellantis keeps breaking records, and last year was no different, with new records in net revenues, profit, and cash flows.
Stellantis' industrial free cash flow was €12.9 billion, which is still very good for a market cap of 70 billion, and I remember making my first video about Stellantis when this was like 35.
The market share is slowly declining, but overall they did sell more vehicles and this is however with significant strikes in the US last year. They also had an impact on the year as a whole, so keep that in mind.
To see the potential of such a merger, out of €12.9 billion in industrial free cash flows, they generated €8.4 billion in net cash synergies. Not only that, but imagine how much more leverage they have when negotiating - be it with suppliers or even governments.
By the way, the industrial free cash flow is basically the money they make from selling or renting cars and it doesn’t include financial services. They are doing a bunch of investments and restructuring and stuff but you can see all the numbers in the report. I think it’s a good idea that they separate them because adding financial services can mess up the working capital and ultimately the cash flow, but mostly on paper. Still, they aren’t hiding something and this is common with companies that also offer this kind of financial services.
They have current assets of $91.5 billion, of which $43 billion is in cash, which almost cover the total liabilities, so they are doing very well from this point of view. Think about how much they can do with that money. They can literally buy the 2 biggest lithium companies on the planet - needed for EVs - and still have money to almost do it again. They won’t, of course, but they made many smaller investments recently and still have a lot of money. So, you can see that there is a lot of potential.
They also raised the dividend to €1.55 - a 16% increase - and doubled the buybacks for this year to €3 billion. For the current price, that’s a yield of around 7%, plus 4.5% in buybacks. For my average buying price, it’s pretty much double these amounts, but even today, this is a very good yield.
I really don’t like buybacks at all time highs, but at least they are in a very good position to pay them. Despite the yield being high, the payout ratio for buybacks and dividends is not that much despite the yield being high, so that’s pretty good.
So, overall a very good year, despite labor issues and generally a bad environment with high interest rates, inflation, supply chain issues and so on.
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0:00 Stellantis (NYSE: STLA) Stock Review
0:19 Stellantis (NYSE: STLA) Financial Analysis, Dividends, Risk-Reward
5:42 Stellantis (NYSE: STLA) Stock Valuation + Price Target
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Here's my latest Stellantis (NYSE: STLA, STLA.MI) stock analysis. As always, I go through the company's financials, dividends, risk-reward potential before wrapping everything up with a valuation for the stock, my buying target and conclusions!
Great Video Andrew! Eagerly waiting for your video on Gold Mine Stocks 😁
Thank you, Arun! It's coming for sure! I decided to include 6 companies in this one 👌
@@Investing_With_Andrew No points for guessing your favourite one 😁
Also, please include the 3 scenarios for atleast 3 of those top stocks!
@@arunbhandary4024 I already recorded the audio 😥 there's a general comment there regarding these 3 scenarios, but I can add some text to the video maybe
@@Investing_With_Andrew sure Andrew! no worries!
Are you buying with this recent pull back? I bought some calls expiring 2026/01
Yes, I bought a bit recently
Albemarle issues about 1.8B in shares today. I think it’s a smart move just to have some extra cash while we wait for lithium to slowly come back and as we know it’s a high Capex business. Thoughts?
It’s good for the business as it would secure the money needed for a lot of projects without having to issue interest-bearing debt. I wish they did it a couple of years ago though since the price was much higher
@@Investing_With_Andrewthanks looking forward to the video update including Arcadium or sqm which just reported q4
Yup, Arcadium coming next week. Already working on it 😁
@@Investing_With_Andrew thanks, one thing I would like to hear about is how healthy albemarle is. It seems they changed one of their SEC covenants so that they can temporarily have a higher equity to debt ratio until 2026. Not sure how I feel about as a shareholder
Based on the last earnings report, I would say they are ok. No big long-term debt maturities to worry about, maybe 2027 + 2028 where they have to pay back over $1.2 bil combined, but it doesn’t look like such a big issue. I would wait for the Q1 report to see the effect of the issued shares (if they do it by the end of Q1). I prefer SQM between the two, but Albemarle doesn’t look that bad. I think the covenant change is related to them wanting to finish the current projects, for which they might have to issue more shares or debt - just my guess.
I am buying $2000USD every quarter until 2028
Nice plan 👌 why until 2028 though?
@@Investing_With_Andrew I believe this is when the EV market will surpass 1 trillion dollars and we'll see India become an emerging giant in the sector.
Oh, got it. Thanks for the answer!
Thanks a lot, but don't forget the timing bomb represented by the reliability issues affecting the 1.2 l PureTech engine that is installed in many cars produced by Stellantis (most Peugeot, Citroën, DS, Opel). The main issue is the wet timing belt that degrades and can break or clog the oil filter, with ugly results in both cases.
Thank you for the comment! The issue seems to happen less now after changing the belt supplier, but it is a sum of other factors, not only the belt itself. Recalls and new issues will always come, this is a risk to take into account with every car company
There is a class action in France, a country where class actions are not frequent. The millions of existing PureTech engines are a problem. The customers that got trapped with this engine (in many cases with a 100% destroyed engine), then poorly treated by Stellantis, will never buy a car from this company again. They will probably buy a Toyota, Honda, or any brand with sound engineering practices.
That is true. No provisions can offset that kind of loss. I should've included something about this in the video 🤔
Stellantis makes good numbers, but dealers are suffering, they have no cars to sell, no margins and introduced to new comtracts which demand them to fulfill conditions which are to expensive compared to earnings. Dealer network of citroen, opel, peugeot, etc are dying.
Selling cars to toyota cripled sales of stellantis core brands who did not have acces to cars which made money (Berlingo, spacetourer and its derivates with ICE engines). And these lost money are not being redeemed anywhere.
That's true. I can't say I'm a fan of EVERY aspect of the company. There are definitely many things to improve about them.
@@Investing_With_Andrew Thing is what happens to stellantis core, when they loose dealers? Who is going to buy cars you cant service because services dont exist. Citroen lost some 50% presence in new cars sales last year, DS is not being buyed even in france, opel, peugeot, alfa romeo... All the same issue. New citroen c3 ev is 20% more expensive than chinese competiton with more range (for example dongfeng box). Dealers in austria, czechrepublic, slovakkia, poland, germany, spain etc are demanding more cars to sell, cars that are being delivered to toyota which claimed markets of stellantis brands. Instead they were asked to change image which cost tens of thousands of euros and nothing shows these money will be back from sales.
There were record bonuses for management that made this and when these people are asked by importers, dealer associations etc how are they supposed to survive, they yell that that is dealers problems. I know many dealers who quit stellantis last year or year before and many more who are about to quit because cant fullfil new contracts or are not willing to.
Stallantis may rise, but i feel that brands within stellantis will fal or become irelevant meaning the get canceled.
We will see