4 Reasons Stellantis Looks Like a Long-Term Buy
While many investors in the United States may not be immediately familiar with the name Stellantis (NYSE: STLA), they are almost certainly familiar with some of the companies within in its portfolio, Jeep, Dodge, and Ram, which sell some of the most popular vehicles in the United States. Stellantis is also home to some of Europe's largest automakers, such as Peugeot, Opel, and Fiat, and the luxurious Maserati. Stellantis came into being in early 2021 when Fiat Chrysler officially completed its merger with PSA Group (the parent company of Peugeot, Opel, and others). The combined company is the world's fourth-largest auto manufacturer by volume. Here are four reasons that the stock looks like a compelling investment opportunity.
Image source: Getty Images.
Even in the broader auto space, where many auto manufacturers are trading at depressed valuations because of concerns about supply chain problems, the semiconductor shortage, and the war in Europe, Stellantis stands out as cheap. These concerns seem more than accounted for, as shares trade for just three times earnings, which is one of the cheapest valuations investors will come across. For context, top U.S. automakers like Ford (NYSE: F) and General Motors (NYSE: GM) trade at price-to-earnings multiples of 4.5 and 6 respectively, both of which also represent a steep discount to the broader market. Tesla (NASDAQ: TSLA), in a class of its own in terms of valuation, sports a P/E multiple of about 90 . This company is not a melting iceberg with shrinking revenues -- in fact, for fiscal 2021, sales increased by 13.6% compared to 2020. Stellantis recently reported that for the first quarter of 2022, a period that included all these challenges, revenue increased by 12% year over year from the first quarter of 2021. While total shipments were down because of the semiconductor shortage, the company was able to offset lower unit volume with higher prices. When that bottleneck clears up, it should bode well for Stellantis. The company also has a strong balance sheet with more cash than debt, so this isn't a case of a cumbersome debt level dragging down a stock's valuation.
Source Fool.com
