Monday, May 11, 2015

Seeking Alpha: Commercial Vehicle Still A Great Story That Nobody Cares About

The line between patient and stubborn can be a little fuzzy at times, but sometimes investors have to have the stamina to wait for the market to wake up to a story. That is still my approach to Commercial Vehicle Group (NASDAQ:CVGI), as management continues to execute on a plan to drive not only sales growth, but greater diversification and higher margins in the years to come.

Commercial Vehicle Group has badly lagged other commercial vehicle suppliers like Cummins (NYSE:CMI), Allison (NYSE:ALSN), WABCO (NYSE:WBC), and Grammer (OTC:GMEGF) over the past year despite double-digit revenue growth and noticeable improvements in margins. Some of that could be tied to the company's leverage to the possibly peaking North American truck market, but perhaps also because this barely-followed stock is just not on anybody's must-watch list.

Whatever the case may be, I continue to believe this is an interest relative and absolute value story today. I don't think my forecast of 5% long-term annualized revenue growth is that ambitious, particularly given the company's efforts to target growth in agriculture and construction, nor do I believe my mid-single digit FCF margin is ambitious relative to the norms in this sector. Those inputs still support a nearly $9 fair value, though, so I believe this is still a stock well worth consideration.

Read the full article here:
Commercial Vehicle Still A Great Story That Nobody Cares About

No comments: