Transportation and Automotive Sector Ideas

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Ferrari - >>> If you only buy one auto stock, it should be luxury supercar maker Ferrari for three simple reasons.


https://www.fool.com/investing/2023/04/18/why-ferrari-hermes-and-coca-cola-are-no-brainer-bu/


First, its core customers are so affluent that they're largely resistant to inflation, rising rates, and other macro headwinds.

Second, it's not struggling with supply chain issues like many other automakers because it only produces a few thousand vehicles every year.

Lastly, Ferrari's pricing power enables it to consistently sell its vehicles at much higher gross margins than lower-end automakers do. That elasticity also allows it to comfortably raise its prices to offset any higher supply chain and production costs.


Between 2017 and 2022, Ferrari's annual shipments rose from 8,398 to 13,211 vehicles as its revenue grew at a compound annual growth rate (CAGR) of 8%. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded from 30.3% to 34.8%, and its adjusted EPS grew at a CAGR of 13%.

Analysts expect Ferrari's revenue and adjusted EPS to grow 15% and 22%, respectively, in 2023. A major catalyst this year will be the recent launch of its all-electric Purosangue SUV, which already has a backlog of orders for at least the next two years.

Ferrari's stock isn't cheap at 41 times forward earnings, but its stable growth, resilience during economic downturns, high margins, and growth potential in the booming luxury EV market all justify that premium valuation.

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