Over the past six months, Aston Martin (LSE:AML) shares have been among the top performers on the FTSE 350. The stock is up 88% over six months. Some of these gains came on Thursday after Chinese carmaker Geely doubled its holding in the iconic automaker.
Aston Martin shares have been extremely volatile in recent years. In fact, they haven’t been too good to me. So is this the best it’s going to get? Let’s take a closer look.
Heading for success?
Aston has set out a strategic objective to increase deliveries to 10,000 cars a year by 2024/2025, and achieve £2bn in revenue and £500m in EBITDA. Only 6,412 vehicles were sold in 2022. But the company now says it can hit its revenue target by selling just 8,000 vehicles.
A major reason for this is the focus on higher margin vehicles, including the DBX SUV and the Valkyrie hypercar. Aston Martin will make a total of 150 Valkyries, all of which have been sold — they were valued at $3m each.
However, it’s worth noting that the medium-term guidance still suggests the company will be able to shift 10,000 units, up from around 7,000 in 2023.
What’s achievable?
To access what’s achievable, I’m going to look at Aston’s peers, Ferrari and Porsche. The former is known for having some of the best margins in the industry — the Italian manufacturer earned an astounding $106,078 per unit sold in 2021. In fact, we can assume Lawrence Stroll’s decision to poach former Ferrari boss Amedeo Felisa reflects an attempt to follow in the Italian brand’s footsteps.
Brand
Deliveries
Market-Cap
Aston Martin
6,412
£1.8bn
Ferrari
13,221
€53bn
Porsche
34,801
€52bn
Here we can see the discrepancy between the three companies, but we can also observe the opportunity. Aston Martin delivers half as many cars as Ferrari but is valued 20 times less than the Italian carmaker.
I believe it’s entirely possible that Aston can replicate the success of its peers. And I also believe it’s on the right track to do so. The focus on margins appears to be paying off already, with the company registering a small operating profit in Q4 of 2022 — a possible turning point for the brand.
The success of the F1 team in 2023 will only be positive for the firm’s reputation in the US and further afield.
An opportunity to sell?
Debt is a big issue and repayments will continue to impact profitability going forward — interest expenses are likely to reach £120m in 2023. However, despite this and the recent gains, I’m holding my shares.
As demonstrated by Porsche and Ferrari, there is huge potential for Aston Martin in this premium part of the auto market. Under Stroll’s leadership, the brand has been successful in lifting margins and volume. I’m buoyed by what I’ve seen so far.
The post Should I sell Aston Martin shares after they soared 15% on Thursday? appeared first on The Motley Fool UK.
5 stocks for trying to build wealth after 50
Inflation recently hit 40-year highs… the ‘cost of living crisis’ rumbles on… the prospect of a new Cold War with Russia and China looms large, while the global economy could be teetering on the brink of recession.
Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.
Claim your free copy now
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#ffffff”, ‘color’, ‘#FFFFFF’);
})()
More reading
If I’d bought 3,788 Aston Martin shares six months ago here’s what I’d have today
Up 110%, Aston Martin shares could still be a bargain! Here’s why
Can I double my money with Aston Martin shares?
James Fox has positions in Aston Martin Lagonda Holdings Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.