Cyclical industries can be difficult to model in the best of times, and the last year and a half has been anything but that. With pent-up demand coming out of the pandemic and ongoing growth in e-commerce, orders for heavy-duty trucks should climb into 2022, leading to a revenue peak at some point in 2022 and 2023. Meanwhile, construction orders are generally improving everywhere outside of China and could get another boost from an infrastructure plan in the U.S., if that passes.
Volvo (OTCPK:VLVLY) is managing the cyclical uncertainties and more recent supply challenges well, and I believe the restructuring efforts made since Martin Lundstedt took over the CEO role in 2015 will continue to pay benefits. I also like the tech story here, as Volvo is well-placed to be a leader in truck electrification. Although I don’t think the shares are expensive, I do have concerns that the market is already pricing in the next peak and these shares carry above-average risk.
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Volvo Managing Surging Orders And Supply Challenges Well, But The Market May Already Have Moved On
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