Valeo May Finally Be Bottoming

The best I can say about Valeo (OTCPK:VLEEY) is that the shares of this French auto parts company really haven’t done much worse than the peer group over the past year, a stretch over which only a small group of stocks like Aptiv (APTV) are up, and that the company continues to outperform underlying global build rates. Valeo remains one of the least-liked companies that I follow in terms of sell-side support, with several “Underperform/Sell” ratings on the shares.

I continue to believe that the shares reflect an overly pessimistic assessment of the company’s future, particularly given the potential of its Siemens (OTCPK:SIEGY) JV for electric vehicle components, but not unlike BorgWarner (BWA), questions have arisen as to the true value of the order book and whether future margins will live up to expectations. Management appears to have almost no credibility on the Street, and I consider this a higher-risk candidate, but I believe stabilization in the global car market next year could lead to a re-evaluation of the shares.

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Valeo May Finally Be Bottoming