7 Most Undervalued Auto Stocks To Buy According To Analysts

2. Stellantis N.V. (NYSE:STLA)

Number of Hedge Fund Holders: 31

Forward PE Ratio: 4.15

Average Price Target Upside: 32.81%

Stellantis N.V. (NYSE:STLA) is a Netherlands-based global automotive manufacturer formed in 2021 through the merger of Fiat Chrysler Automobiles (FCA) and the PSA Group. It is one of the largest and fastest growing automotive brands in the world. It is also one of the most undervalued auto stocks according to analysts.

The company owns several well-known brands such as Chrysler, Jeep, Alfa Romeo, Maserati, and Peugeot. The company has made substantial investments in electrification as part of its “Dare Forward 2030” strategy, aiming for 100% battery electric vehicle (BEV) sales in Europe and 50% in the U.S. by 2030, alongside a goal of offering more than 75 BEV models globally.

On October 4, the WallStreet Journal reported that Stellantis (NYSE:STLA) is implementing significant cost-cutting measures to improve its financial stability. It is adopting an internal strategy dubbed the “doghouse” to limit external spending.

It aims to enforce stricter controls on purchase requisitions from outside vendors. The company CFO, Natalie Knight emphasized that improving discipline in spending could lead to significant savings for the company. Although the guidelines are not new, the company clarified that this approach targets projects requiring additional scrutiny without impacting existing purchase orders or invoices.

Stellantis (NYSE:STLA) is also quite a shareholder-friendly company that has a remarkable dividend yield of over 12%. Despite that, its payout ratio is 44%. On February 15, Stellantis announced a share buyback program worth up to €3 billion, set to run until December 31, 2024.

It completed the first phase of the program on May 1 and purchased 41,094,781 common shares, and the second phase on June 27, with 51,025,628 shares bought. The third phase began on August 1, which has been completed.

The company spent a total of nearly €1 billion to buy back 72,041,332 common shares since August 1. As of October 2, the company now holds 3.95% of its total shares as treasury stock. It is one of the most undervalued auto stocks to buy.