IMPORTANT POINTS:
- Michael Burry backs Stellantis NV stock.
- Stellantis NV, a leader in the automotive sector and shows solid fundamentals.
- Analysts predict strong growth for Stellantis stock in the coming year.
Michael Burry, recognized as one of the world’s most prominent stock investors, captured the world’s attention 15 years ago with an accurate prediction that shook the financial landscape.
In addition, he was the pioneer in foreseeing the subprime mortgage crisis, an essential event that triggered the Great Financial Crisis of 2007-2009. This insight not only preserved his investments, but also netted him a staggering $100 million in personal profit, generating a stellar $700 million for his investors by going short the mortgage bond market.
Today, we dive into Burry’s recent portfolio disclosures, specifically focusing our attention on one of the dozens of stocks he owns. Among the well-known names, we examine the stock that we believe has the potential to deliver strong returns to investors in the coming years: Stellantis NV (STLA).
Stellantis NV: A giant in the automotive world
Stellantis, a renowned Dutch automobile company, owns 16 world-famous automobile manufacturer brands, including Alfa Romeo, Dodge, Maserati, Chrysler and Peugeot. As of 2022, Stellantis is crowned the largest automobile producer by units sold and ranks seventh as an electric vehicle manufacturer.
According to the latest available regulatory filings, Burry’s hedge fund owned STLA stock valued at approximately $5.7 million, or 325,000 shares.
First, let’s examine the company’s fundamentals. During the first half of 2023, Stellantis’ shipments grew by 10%, while its revenue and operating profit increased by 12% and 31%, respectively. In that period, the automaker reported operating income of €13.5 billion and net income of €10.9 billion.
With a current market capitalization of $57.5 billion, Stellantis has a price-to-earnings (PE) ratio of 2.81, according to data from Yahoo Finance. This indicates that for every dollar of profit the company generates, its stock is currently trading at a price of $2.81. Considering the company’s track record, brand alignment, and financial health, this suggests that STLA could be significantly undervalued.
Analyst Predictions on Stellantis
The attractiveness of STLA stock is reflected in analysts’ bullish predictions. Notably, the average 1-year price forecast for Stellantis stock stands at $24.23, based on forecasts from 24 analysts. This figure is more than 30% higher than its current share price.
Additionally, all 25 analysts who have commented on the stock in the last 3 months have consensus rated it a ‘Strong Buy’, according to TradingView. Of these, 19 strategists see STLA as a ‘Strong Buy’, 2 suggest a ‘Buy’, while only 4 believe it is a ‘Hold’.