GM - Nissan: The High Opportunity Cost Of Choosing The Wrong Automaker

2024-03-28 15:22:47 ET

Summary

• In this article, I will focus on Nissan and show why investors should think about opportunity costs, especially in highly competitive industries.
• Nissan's net revenue and operating profit have increased, but it still faces intense issues in key markets.
• We will look at Nissan's latest financials and compare the main valuation metrics against its competitors.

Introduction

Even in a bull market, picking the right stocks can make a (big) difference.

Automakers belong to an industry that has seen investors fleeing due to several concerns. As electric vehicles are developed and sold, there is an intensive need for capital to fund this technological turnaround. Nowadays, capital intensity is not the most desired business quality by investors. In addition, the industry is highly competitive and this leads to low margins. Finally, it is highly exposed to interest rate fluctuations.

I am no fan of the industry. However, I am exposed to a few names because I came to understand I was before some true deals that had many resemblances with Peter Lynch's investment in Ford back in the late 80s....

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