{"id":37136,"date":"2023-11-25T19:36:18","date_gmt":"2023-11-25T19:36:18","guid":{"rendered":"https:\/\/microloannexus.com\/investing\/one-auto-stock-to-buy-now-to-split-the-ev-difference\/"},"modified":"2023-11-25T19:36:19","modified_gmt":"2023-11-25T19:36:19","slug":"one-auto-stock-to-buy-now-to-split-the-ev-difference","status":"publish","type":"post","link":"https:\/\/microloannexus.com\/?p=37136","title":{"rendered":"One Auto Stock to Buy Now to Split the EV Difference"},"content":{"rendered":"
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Vontier sells gas pumps, and the concern is that demand will dry up as cars go electric. Here, Gilbarco pumps in Iran.<\/h4>\n


\n Alamy
\n <\/span>
\n <\/figcaption><\/figure>\n<\/p><\/div>\n

The auto industry is stuck in limbo.
\n Vontier
\n stock might just be getting out of it.<\/p>\n

For car companies, it hasn\u2019t been easy being stuck someplace in the transition to electric vehicles. The old-fashioned combustion engine is on its way out, creating a major headwind for traditional auto companies. But the transition to EVs has hit some roadblocks, creating uncertainty about where it goes next.\u00a0\u00a0<\/p>\n

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Vontier (ticker: VNT), which makes a variety of gear for both gas-powered and electric vehicles, has been stuck in a different kind of transition. It was spun out of
\n Fortive
\n (FTV) in 2020, after Fortive itself was split off from Danaher in 2016. That has left Vontier in an in-between state as investors try to figure out what the company is and where its business is going. Shares have dropped 8% since peaking in September 2021, even after gaining more than 70% this year.<\/p>\n

Despite the lackluster returns since the spin, Vontier is a stock that can win no matter what kind of car people decide to drive. The Raleigh, N.C.\u2013based company specializes in software and hardware for every stage of driving. It sells gas pumps to gas stations and convenience stores as well as the card readers and point-of-sale software that make them work. It helps commercial fleet owners know how their equipment is being used. It also sells the tools mechanics need to fix all the vehicles. Its products are in hundreds of thousands of locations, mainly in North America and Europe.\u00a0<\/p>\n

Coming from Danaher means Vontier applies the Danaher Business System, or DBS, to its business. That essentially means small bolt-on acquisitions to boost growth while improving profit margins using lean manufacturing techniques. Among industrial investors, DBS is the gold standard\u2014and it has also paid off for shareholders. Danaher stock has gained more than 140% over the past five years, outpacing the S&P 500\u2019s 73% rise.<\/p>\n

Despite its storied ancestry, Vontier is only starting to hit its groove. One problem has been perception. Vontier sells gas pumps to convenience stores and gas stations, and as cars go electric, the concern is that no one will need gas pumps. That isn\u2019t quite right. Heavy-duty trucking might never go fully electric, and Vontier technology can dispense hydrogen, natural gas, or anything else trucks need.\u00a0<\/p>\n

What\u2019s more, just 1% or so of the total number of vehicles on U.S. roads are battery-electric vehicles, and even if 40% of light vehicles sold in the U.S. were all-electric by 2023, they would represent roughly 10% of the total fleet. Vontier will benefit from that transition through its EV-charging business. \u201cWe\u2019ve actually got 50,000 plugs under management,\u201d says CEO Mark Morelli. \u201cThat\u2019s one of the leading platforms [based on the] number of plugs under management.\u201d\u00a0<\/p>\n

Another technology transition has caused some bumps: the shift from credit-card swipes to chip readers. Vontier makes all the equipment and software for card readers. The switch to chips provided a nice $500 million boost to sales from roughly 2020 through 2022, but when that surge ended, Vontier\u2019s revenue stagnated. Over the coming two years, Wall Street sees sales growth returning to about 4% a year on average. \u201cThe stock is pricing in revenue declines, while we see growth ahead,\u201d UBS analyst Robert Jamieson writes. He rates shares Buy and has a $38 price target for the stock, up 14% from a recent $33.43 a share.\u00a0<\/p>\n

The Danaher business system\u2014or Vontier business system, as the company refers to it\u2014will turn those sales into earnings. The approach relies on decentralized, hands-on management, and pulls together people from all levels of the company. As a result, operating profit margins should hit 22% in 2024, above the 16% average for industrial companies in the
\n S&P 500.<\/span>
\n For the coming two years, Wall Street expects earnings growth of about 10% a year on average, to $3.45 a share in 2025.\u00a0<\/p>\n

Vontier\u2019s valuation seems too low for that kind of growth. It trades at just 10.7 times 2024 earnings, below the S&P 500\u2019s 18.2 times, where earnings have grown at about 12% a year on average for the past few years. Jamieson\u2019s $38 target would put Vontier\u2019s valuation at 12 times. If it can get to 15 times, it would be worth $52 a share, up 50% from recent levels.\u00a0<\/p>\n

Vontier\u2019s technologies will be around for decades, and the company will continue to adapt to the rules of the road. It\u2019s time to buy the stock.\u00a0<\/p>\n

Write to Al Root at allen.root@dowjones.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Vontier sells gas pumps, and the concern is that demand will dry up as cars go electric. Here, Gilbarco pumps in Iran. Alamy The auto industry is stuck in limbo. Vontier stock might just be getting out of it. For car companies, it hasn\u2019t been easy being stuck someplace in the transition to electric vehicles.<\/p>\n","protected":false},"author":1,"featured_media":37137,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[],"class_list":{"0":"post-37136","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investing"},"yoast_head":"\nOne Auto Stock to Buy Now to Split the EV Difference | Micro Loan Nexus<\/title>\n<meta name=\"description\" content=\"Vontier sells gas pumps, and the concern is that demand will dry up as cars go electric. Here, Gilbarco pumps in Iran. 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