Published -July 6th, 2023 @ 4:03 PM (GMT+2)

Stellantis N.V. (NYSE:STLA), a Netherlands-based company that designs, manufactures, and distributes vehicles, is attracting the attention of investment management firms. Vltava Fund, a prominent investment management company, recently highlighted Stellantis N.V. in its Q2 2023 investor letter. 
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• Stock closed: $17.55 per share
• YTD: +17.23% 
• Market capitalization: $54.45 billion
• Annual Revenue: $179.59 billion
  
  

Vltava Fund firmly believes that the best investments are found in stocks that are undervalued. This ethos is evident in its investment in Stellantis N.V. Born from the merger of Fiat Chrysler and French automaker PSA Group, Stellantis is now the fourth-largest car company in the world. Under the influence of CEO Carlos Tavares and the Agnelli and Peugeot families, Stellantis is projected to elevate from its current sales level of EUR 180 billion to EUR 300 billion by 2030 while maintaining high industry margins. On top of its healthy financial performance, the company also carries a net cash value of EUR 23 billion on its balance sheet.
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Stellantis's Brand Diversity and Shareholder Value

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Apart from its strong business performance, Stellantis has a diverse brand portfolio covering various market segments and regions. This portfolio includes Alfa Romeo, Chrysler, Citroen, Dodge, Fiat, Jeep, Maserati, Ram, Opel, Lancia, Vauxhall, Peugeot, and others. The controlling shareholders and the management are committed to shareholder value, with dividends and share buybacks playing significant roles in the company's capital allocation strategy. Despite all these strong indicators, the company is still trading at three times its annual earnings, which Vltava Fund considers deeply undervalued.

Stellantis's Future Growth Strategy: EV Battery Plant

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Stellantis's growth strategy continues beyond its current operations. The automaker, in partnership with LG Energy Solution (LGES), has resumed the construction of a $3.7 billion electric vehicle (EV) battery plant in Windsor, Ontario, Canada. This development comes after the Canadian federal government and the province of Ontario increased subsidies for the project. The plant's construction, which is now set to commence operations in 2024, will create about 2,500 new jobs and aims to achieve an annual production capacity of over 45 gigawatt-hours.

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Stellantis's Sustainable Commitment and Future Growth Potential

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Stellantis and LGES initially announced their investment in the battery plant in March 2022. However, construction was halted in May 2023 due to a demand that Canada match the support available in the U.S. under the Inflation Reduction Act (IRA). This resumed the project, together with Stellantis's promising current financial performance, further consolidates the automaker's position as a powerhouse in the automobile industry and a significant player in EV battery production. The resumption of the battery plant construction exemplifies Stellantis's commitment to sustainable and affordable mobility, emphasizing the company's strong potential for future growth.

These strategic moves, with its robust financial health, high industry margins, and strong growth projections, make Stellantis a compelling investment opportunity. Vltava Fund's investment in Stellantis underscores the potential that underappreciated stocks can offer to investors.

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