How to buy Valeo stocks in 2024

1. eToro

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eToro is regulated by the Financial Conduct Authority (FCA) and the Cyprus Securities and Exchange Commission (CySEC) and has received its brokerage licenses to operate in Europe, USA, and Australia from several regulatory agencies.

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Cons

• Limited customer service

2. Capital.com

Capital.com is a multi-asset asset broker launched in 2016. The platform now has over 500,000 registered users with more than $5 billion in volume traded. Capital.com is built to help trading decisions with its Patented AI trade bias detection system. You can read our full Capital.com review here.

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3. Skilling

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Fees and Features

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Pros

• Flexibility and ease of use
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• Excellent customer service
• Highly secured and well regulated

Cons

• Single currency operation
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In this section, we take a deeper look at Valeo by exploring its history and strategy, how it makes money, and how it has performed in recent years.

Valeo History

The company was founded in Saint-Ouen in 1923, under the name Société Anonyme Française de Ferodo. It started as a distributor of brake linings and clutch facings under the license of Ferodo Ltd UK but later started producing clutches. In 1932, it was listed on the Paris Stock Exchange, and in the 1960s and 70s, it diversified into the production of braking systems, thermal systems, lighting systems, and electrical systems.

In the 1960s, the company started expanding outside France, establishing offices in Spain and Italy. It subsequently expanded to Brazil, the US, and the rest. As of 2018, it has a presence in 33 countries. The company changed its name to Valeo in May 1980. In 2015, it acquired German automotive suppliers Peiker and Spheros, and in 2017, it acquired FTE automotive.

What Is Valeo’s Strategy?

Valeo is a partner to automakers, designing innovative solutions for smart mobility. It operates through four segments - comfort & driving assistance systems, powertrain systems, thermal systems, and visibility systems. The company’s strategy is to grow through innovation and international development.

In the areas of innovation, the company invests 11.8% of its sales in research & development and has more than one-third of employees working in that department. Its innovation focuses on intuitive driving and the reduction of CO2 emissions. The company ranked as France’s leading patent filer in 2016 and 2017.

On the aspect of international development, the company wants to be near its automaker customers and new mobility companies. It focuses on high-growth potential regions, such as Asia, and emerging countries. It has a strong presence in China and Northern Africa (Egypt).

How Does Valeo Make Money? 

Valeo makes money from the sale of its products and services, which include comfort & driving assistance systems, powertrain systems, thermal systems, and visibility systems, as well as aftermarket services.

In its financial report, the company categorizes its offerings into original equipment, aftermarket, and others. In the 2020 fiscal year, which ended on December 30, 2020, the company reported €16.4 billion in sales (revenue), with original equipment sales contributing 84%, aftermarket 11%, and others 5%. See the picture below.

Source: Valeo.com

In terms of geographical areas, South America contributed 2% of the sales, North America 19%, Asia & others 33%, and Europe & Africa 46%.

Source: Valeo.com

How Has Valeo Performed in Recent Years?

After stagnating for most of the early 2000s, the stock embarked on a remarkable bull run from 2009. The stock surged from less than €3 at the beginning of 2009 to more than €65 by May 2017, reaching an all-time high of €67.80 — over 22 times factor.

However, the stock has been on a free fall since 2018. A muted attempt at recovery in the last half of 2019 was cut short by the emergence of the coronavirus pandemic in early 2020, which triggered another decline, hitting a low of €10.51 in March 2020.

For the rest of 2020, the stock attempted to recover but could not get beyond €33.73 before starting to fall again. It has been on a decline since the beginning of 2021, and as of Sept. 22, 2021, it’s trading at €21.55, which is about 68% below its all-time high.

Source: Yahoo! Finance

Fundamental analysis is a sort of stock analysis where you study the details of the company’s business. Investors perform this analysis to determine the underlying health and intrinsic value of the company. Some of the metrics they use include the company’s revenue, earnings-per-share, P/E ratio, dividend yield, and cash flow.

Valeo’s Revenue

A company’s revenue, also known as sales, refers to how much money it generates from the sale of its products or services. When the revenue grows quarter to quarter or year on year, the stock price is likely to rise — the opposite happens when there’s a decline in revenue. Revenue is the first thing you see in an income statement, which is why it’s often called the top line. See the picture below:

Source: Yahoo! Finance

From the picture of the income statement above, you can see that Valeo made revenue of €16.44 billion in its 2020 fiscal year compared to €19.48 billion it made in 2019. This represents a 16% decline and may be attributed to the economic effects of the coronavirus pandemic in 2020.

Valeo’s Earnings-per-Share

A company’s earnings-per-share is the amount of profit the company earned for each outstanding share of its common stock. It is calculated by dividing the company’s total net profit (bottom line) divided by the number of common shares outstanding. You will have to subtract the dividends paid to preferred stockholders from the net profit before dividing by the number of common shares.

Note that you can get the EPS from your stockbrokers’ website or any of the major financial websites, so you don’t need to calculate it yourself. Valeo made a loss of €1.09 billion in the 2020 fiscal year; its EPS was -€4.55.

Valeo’s P/E Ratio

The price-earnings (P/E) ratio compares a company’s share price to its earnings-per-share. It is calculated by dividing the company’s current share price by its EPS. If a company’s P/E ratio is 50, for example, it means that investors are willing to pay €50 for each €1 the company earns in a year. To put it differently, investors are willing to wait for 50 years to recoup their investment from the company’s earnings, assuming the earnings remain the same every year.

Generally, a very high P/E ratio may indicate that the stock is overvalued, while a low ratio may indicate that the stock is undervalued. However, there is no cutoff figure for the P/E ratio to know a high value or a low value. Investors simply compare with those of similar stocks to have an idea.

Sometimes, investors may be anticipating higher earnings in the future and tend to price that in. This is why you need the PEG ratio (growth-adjusted P/E value) to account for the growth factor. Since Valeo’s EPS for its 2020 fiscal year was negative, we cannot calculate both the P/E ratio and the PEG ratio, even though we know the share price.

Valeo’s Dividend Yield

Dividends are a portion of a company’s earnings it distributes to its shareholders. They may be paid quarterly, semi-annually, or annually. Valeo has been paying annual dividends for many decades. Whenever dividends are declared, the share price rises until the ex-dividend date and then falls.

A company’s dividend yield is its total annual dividends expressed as a percentage of its share price. It is calculated by dividing the annual dividend by the share price and multiplying it by 100. So, a company that pays out a total annual dividend of €1.50 when its share price is €30 would have a dividend yield of 5.0%. Long-term investors like good dividend yields because dividends are one of the ways they make money from their stockholding.

Despite the impact of the COVID-19 pandemic in 2020, Valeo paid an annual dividend of €0.30 for the 2020 fiscal year.

Valeo’s Cash Flow

The cash flow statement is one of the financial statements you need to study when analysing a stock. It is simply a record of how cash and cash equivalents are generated and spent by a company. You can see it beside the other financial statements in the financials section of the company’s information on any financial websites (eg., Yahoo Finance) or even your broker’s website. See Valeo’s cash flow statement below:

Source: Yahoo! Finance

The most important figure in the cash flow statement is the free cash flow, which tells you how much cash or its equivalents the company has left after taking care of major expenses, such as building and equipment. Notice that Valeo had €362 million in free cash flow at the end of the 2020 fiscal year. That’s the cash available to the company then, which it could use to fund new projects, pay down debts, or pay dividends.

Why Buy Valeo Stock?

Valeo stock has not really performed well since May 2017, and the company has a high level of debt. However, Valeo is a highly innovative company and has been creating superior products in the automotive industry. The company leads the world in parking assistance systems that use ultrasonic sensors. It is working on a low-voltage electric vehicle and presented the prototype at the 2017 Consumer Electronics Show in Las Vegas.

Here are three reasons you might want to buy Valeo stock:

• The company is very innovative and focuses a lot on research and development while expanding into emerging economies with high-growth potential.
• It has a long history of paying dividends, though the yield is quite low.
• The stock is cheap, trading far below its all-time high (as of Sept. 22, 2021).

These are five things you must consider before you buy any stock, including Valeo stock.

1. Understand the Company 

To assess its full potential, you need to conduct research on your chosen company, Valeo. In this case, you may want to get all the information on their previous products, future plans, and business strategy. You need to check the company’s management team and their track record, as well as analyse the company’s financial ratios, such as the EPS, P/E ratio, PEG ratio, dividend yield, and others; these can help you estimate the worth of the company.

2. Understand the Basics of Investing

Don’t ever start investing money in the market without taking some time to learn how the market works and what you can do to protect your investment. For example, you need to learn how orders are executed, the type of order to place, and when to place it. Other things you need to learn include money management, risk management, and diversification.

3. Carefully Choose Your Broker

Choosing the most suitable broker is a difficult process, but if you know what to look for, it makes things a lot easier. The first thing is to check the broker’s regulation status in your country of residence. A broker that is registered with the financial services regulator in your country is safer than a broker that does not comply with current legislation. Moreover, in the event that the broker becomes insolvent, you would be covered by the compensation scheme in your country.

Apart from regulation, you should also consider the broker’s trading commissions and other fees, customer service, payment methods, trading channels (mobile, web, telephone), and supported order types (market order or limit order).

4. Decide How Much You Want to Invest

How do you source the fund to invest? Make sure it’s not borrowed money because nothing is guaranteed in the market; you can lose everything. The best thing is to invest your disposable income. You may take some time to save it up to a sizable amount. When you do, you have to determine how to allocate the funds to different stocks and how you want to enter the market: it may be better to scale in at intervals than to make a lump-sum purchase at one go.

5. Decide on a Goal for Your Investment

You must have a goal for your investment: it could be that you want to build a retirement fund or want to raise money for a future project. Whatever your goal is, create a plan for it. You don’t just invest in stock; you must have a strategy for getting out of the market. Your strategy could be to sell when the price reaches a particular level or on a specific date in the future.

Valeo is a French multinational company that supplies auto components to automakers around the world. You might want to invest in this innovative company to benefit from its long-term growth potential, and you can do that through a stockbroker with access to the Paris Stock Exchange.

To invest in Valeo shares right now, register with the right stockbroker, fund your account, select Valeo from the broker’s list of stocks, and then place an order to buy the stock.

However, if you’re not yet ready to invest right now, keep educating yourself by reading other guides on our website. In addition, practice “paper trading” using a stockbroker’s demo account to get used to the process.