8 Most Undervalued EV Stocks to Buy According to Hedge Funds

5. Stellantis (NYSE:STLA)

Forward P/E Ratio as of March 7: 3.82

Number of Hedge Fund Holders: 32

Stellantis (NYSE:STLA) is a global automotive manufacturer that is expanding its EV presence alongside its traditional offerings. The company designs, engineers, manufactures, and distributes a range of vehicles under brands like Peugeot, Citroën, Fiat, and Jeep.

The company is pushing its EV segment, despite a challenging 2024. It launched 20 new models in 2024, with 10 more planned for 2025, which includes the electric Jeep Wagoneer S. Still, consolidated shipments for the company fell 12% in 2024 to 5.4 million units, and net revenues dropped 17% to EUR157 billion. The company plans to recover from a difficult 2024 through collaboration and market expansion in the EV segment. In China, the Leapmotor International venture is a critical partnership, with Leapmotor doubling its sales to 300,000 units in 2024. In Europe, Stellantis (NYSE:STLA) is introducing new EVs and mild hybrids in the competitive B segment.

It’s also addressing the growing importance of software in EVs, particularly with AI and autonomous driving features. The company is integrating software and engineering teams to accelerate the development of these technologies. Stellantis (NYSE:STLA) aims to return to positive industrial free cash flow in 2025, weighted more towards H2 of the year. Inventory reduction, market coverage enhancements, and increased competitiveness are also a focus for 2025.

Earlier in 2024, Ariel Global Fund expressed its bullish sentiment on Stellantis (NYSE:STLA) and stated the following in its first quarter 2024 investor letter:

“We added multinational automotive manufacturing company, Stellantis N.V. (NYSE:STLA), which was formed from the merger of Fiat Chrysler Automobiles and the French PSA Group in the period. With deal synergies lowering overall operating expenses and contributing to healthy free cash flow generation, management has begun increasing shareholder returns through dividends and share buybacks. Although some investors remain on the sidelines over concerns auto sales and margins have peaked, STLA’s average transaction price is growing year-over-year. We think this momentum will continue and expect STLA to deliver double-digit operating profit margin as it further expands its leading position in the Middle East and South America. Furthermore, the company’s Leapmotor joint venture presents a unique way to benefit from the strengths of Chinese original equipment manufacturers. Meanwhile, in the current electric vehicle slowdown environment, we believe STLA is best positioned to weather the storm. Management believes it can maintain profitability and is open to rationalizing its 14 brands. STLA seeks to be number one in the commercial vehicle segment by 2027, which comes with high customer stickiness, solid profitability and recurring revenue streams.”