Thursday, March 14, 2019

Commercial Vehicle Performing Well In A Plateauing Market

Taken in isolation, things are going well for Commercial Vehicle (CVGI), as the company’s management has executed pretty successfully on cost-optimization and business restructuring efforts. The company also has some future growth opportunities that could drive long-term revenue growth above build rates, as truck and off-road vehicle manufactures add more electrical components and systems to their vehicles. The “but” is that Commercial Vehicle’s primary markets appear to be plateauing and it may be hard for the shares to get ahead as near-term revenue growth prospects diminish.

Holding cyclical stocks through cyclical declines can be a painful test of patience. I do believe Commercial Vehicle remains undervalued, but it’s tough to say how much of the impending decline in truck production is already priced into the shares. Investors with a longer term orientation may not care, but the next year or so could be more challenging for the stock.

Read more here:
Commercial Vehicle Performing Well In A Plateauing Market

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