RACE - In The Luxury Car Race We Are Betting On Porsche
2024-04-15 12:43:56 ET
Summary
- Luxury automakers like Ferrari and Porsche offer attractive financial performance due to consumers' willingness to pay high markups for prestige.
- Ferrari has delivered over 600% returns to investors since its IPO in 2015, while Porsche's performance has been lackluster.
- Porsche has a more reasonable valuation compared to Ferrari and offers a margin of safety for investors.
There are many reasons why the automotive industry is not a particularly attractive one. It is capital intensive, sales are very sensitive to the state of the economy, which results in high cyclicality, and most participants tend to have basically no competitive moats. Just like airlines ( JETS ), the automobile manufacturer sector has seen more than its fair share of bankruptcies, given the dangerous combination of high debt loads with cyclical revenue. The only two U.S. auto manufacturers we can think of that have not gone bankrupt are Tesla ( TSLA ) and Ford ( F )....
In The Luxury Car Race We Are Betting On Porsche