Is Volkswagen Stock A Screaming Buy?
Volkswagen, the “people’s car” company has been taking it on the chin. After the emissions scandal hit (I’m sure you’re already aware of it) the stock has been falling faster than the Third Reich at the close of the war. Investors are running scared.
But interestingly enough, sales for October of 2015 have actually grown compared to last year. It seems consumers really don’t care about the emissions scandal and continue to buy the Volkswagen products. Make no mistake, their products, scandal or not, are fantastic. VW, Audi, Porsche… people love these brands, AJ Caesar included.
As unconcerned consumers continue to purchase these great cars, it begs the question… is Volkswagen stock (VLKAY) primed for a rebound? Well it sure looks like it. Before the scandal hit, the stock was trading around $37.50 from a downtrend that began in the summertime (when the stock was around $50 a share).
So as we sit here, the stock is roughly $25 a share, a $60 billion market valuation. In the summer, the company was valued at $120 Billion… What a mighty fall. If we only had a comparable situation with which to build a case for a VLKAY rebound… hmmm….
Well I’ll be! If you recall a similar scandal occurred with Toyota (TM) a few years back when accelerator pedals got stock on some models. The stock tanked about 25% as the scandal hit. Today… It’s up almost DOUBLE from that scandal low. Toyota wasn’t cheating on emissions tests. Their problem actually lead to deaths. Volkswagen cheating is not nearly as bad… but their stock has suffered far worse.
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So yes, we do think Volkswagen could be an incredible buy right now.
Check out this story noting that consumers who purchased Volkswagen products who were deceived can receive $500.
From CNN Money: After apologizing for two months, Volkswagen is finally putting its money where It’s mouth is, forking over $500 to VW car owners hit by its emissions cheating scandal. But for many owners, the gesture is too little, too late.
“I personally feel insulted by their peace offering,” said Nevada resident Dave Thompson, who owns a 2010 diesel Jetta sportswagon. He said buyers paid a $5,000 premium to get the diesel engine and the better fuel economy with the promise that it was also good for the environment.
“That trust is gone,” he said.
Other angry VW owners who wrote to CNNMoney used terms like “slap in the face” and “scandalous” to describe the apologetic payout, which will come in the form of a gift card that can be used anywhere.
Diesel owners will also get another card worth $500 that can be spent only on purchases or services at VW or Audi dealerships, as well as free 24-hour roadside assistance for the next three years.
(you can read the whole thing here) http://money.cnn.com/2015/11/09/news/companies/volkswagen-pay-owners/
I suggest they take that $500 and buy VLKAY Stock. This is seemingly the best turnaround stock of 2015 and beyond.
We’re going to add this one to our model portfolio!
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