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Laying Out a Balanced Bull Case for Stellantis Stock

When you think of Stellantis (NYSE:STLA), you might immediately recognize it as the manufacturer of the Dodge Charger. That’s known as a gas-guzzling muscle car, but the times are changing and Stellantis is an adaptive automaker. Sure, there are downside risks to owning STLA stock, but you might overlook them after delving into Stellantis’s business model.

Interestingly, some people in the U.S. won’t recognize the name Stellantis. It’s a Netherlands-headquartered conglomerate that controls the Dodge, Chrysler, Fiat, Jeep and Peugeot automotive brand names.

Stellantis certainly wasn’t the earliest adopter in the electric vehicle trend. Nevertheless, over the coming years, Stellantis might still make waves in the global new-energy vehicle movement.

STLA Stellantis $16.01

Some Perks and Problems With STLA Stock

Stellantis stock gets a “B” rating, not an “A,” because it’s not a perfect investment. To help you form your own conclusion, let’s dive in and see what’s good and what’s not-so-good about Stellantis.

On the positive side, Stellantis is a consistently profitable business. The company is generally favored by analysts on Wall Street. In addition, Stellantis pays an eyebrow-raising forward annual dividend yield of 8.87%, compared to the sector average yield of around 1%.

So far, it sounds like Stellantis’s investors are in the driver’s seat. Yet, everything isn’t perfect with Stellantis.

Reuters reports Stellantis had to pay “civil penalties for failing to meet U.S. fuel economy requirements for prior model years.” Also, the company plans to limit shipments of traditional gasoline-powered vehicles to U.S. states with “strict emissions rules,” such as California.

Stellantis Steers Toward Clean-Energy Initiatives

The aforementioned civil penalties, along with the Dodge Charger’s reputation for being a gas guzzler, might dissuade EV enthusiasts from investing in STLA stock. However, Stellantis is actually taking decisive steps to establish itself as a supplier of clean-energy vehicles and related products.

Environmentally conscientious motorists can look forward to the 2024 version of the Dodge Charger EV. Car and Driver reports that this “electric muscle car” will likely cost at least $50K, so it will be interesting to find out whether automotive shoppers will cough up for the new-energy Dodge Charger.

Here are three more signs that Stellantis is moving into the vehicle electrification movement:

  • The government of Ontario, Canada, “offered to increase financial support for . . . Stellantis’s battery plant in the province.” Hopefully, negotiations surrounding this battery-plant investment will be resolved soon.
  • Stellantis inked a new agreement with a new agreement with Vulcan Energy Resources, a lithium supplier, “aiming to help” de-carbonize Stellantis’s operations in Europe and especially in France.
  • Stellantis-controlled corporate venture fund Stellantis Ventures is investing in “tunable three-dimensional graphene” provider Lyten. Together, Stellantis and Lyten will “develop applications for advanced lithium-sulfur-based EV batteries, vehicle lightweighting and enhanced vehicle-sensing solutions.”

Stellantis Stock May Be a Buy for Some Investors

20 or 30 years ago, an electric Dodge Charger would have been unimaginable. Yet, here we are, and Stellantis is bringing a chargeable Charger to the market.

That’s not the only surprise, as you probably didn’t know that Stellantis is a generous dividend payer and is favored by analysts. Does this mean you should buy STLA stock right now? Not necessarily.

It depends on whether you feel Stellantis can compete in a crowded EV manufacturing field. Don’t assume that the Dodge Charger EV will be highly affordable or a strong seller. So, Stellantis stock gets a “B” rating overall; it’s intriguing, but not a must-own for all investors.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.