The last six or so months have not been easy ones for commercial vehicle suppliers, nor riskier small-caps in general. In that context, a context wherein Cummins (CMI) shares have dropped about 17%, Lear (LEA) about 20% (before the Cummins bid) and Dana (DAN) around 30%, CVG’s (CVGI) 25% drop since my last update isn’t exactly out of line, particularly considering the magnitude of the changes going on at the company and the execution risk they carry.
I continue to like what CVG management is doing – tying the company’s future growth to “behind the scenes” involvement in electrification and automation, while running the legacy commercial vehicle business with a diligent focus on profitability. This is still a small, under-followed stock, and there’s still ample execution risk in the company’s transformation plan, but I believe these shares can trade back into the mid-teens as investors see the progress in management’s plan.
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