Investors do well to be skeptical when a company announces a major shift in its business and strategic focus. Then again, when a company has amply demonstrated that its legacy businesses just can't produce adequate long-term returns, it can be the beginning to a much brighter future. I have a lot of doubts and questions about Commercial Vehicle Group's (CVGI) decision to pivot toward new opportunities in warehouse automation, military electronics, and EV/logistics vehicles, but considering that the company really couldn't get anywhere with its legacy operations, it seems like a longshot bet worth taking.
I thought CVGI had significant potential upside on a cyclical turn, but I believe the near-tripling of the share price since that last article is driven more by this announcement that it will restructure its legacy operations and pursue new growth opportunities like warehouse automation. This shift makes valuation considerably more challenging, but the valuation isn't bad even if you just look at this as a restructured seating and wiring company, let alone factoring in the new growth opportunities.
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Commercial Vehicle's Decision To Embrace New Opportunities Looks Like The Right Call
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