Luxury carmaker Aston Martin (LSE: AML) shares have jumped since hitting a 52-week low back in March. The stock has added nearly 100% in the past few weeks. However, despite this performance and the company’s financial issues, the stock may have more room to run.
Aston Martin shares on offer?
It’s clear investor sentiment towards Aston Martin shares has deteriorated over the past year. The carmaker has lurched from one disaster to another.
The firm has had to ask shareholders for extra funds to keep the lights on several times. The group has also replaced its CEO and came close to collapse towards the end of last year. An emergency fundraising and new majority owner helped the organisation avoid collapse.
Aston Martin shares were in dire straits even before the coronavirus crisis. The sudden drop in demand has done little to improve the situation. Indeed, the company’s problems stem from the long-delayed launch of its new DBX SUV model. This was supposed to push the business into a new era of growth. Unfortunately, it has nearly bankrupted Aston Martin.
Nevertheless, after more than a year of uncertainty, the business now finally appears to be in a good position. At the end of April, the company locked in a £500m+ fundraising and, towards the end of last week, the group announced another £250m cash call.
Following these efforts, the company has around £500m of cash to help see it through the current crisis. Meanwhile, DBX production is set to begin in July. The organisation is also in the process of cutting 500 jobs and refining its product line. On top of this, a new £1.5m+ hypercar is in the pipeline for launch next year.
All of these efforts suggest Aston Martin shares may have a bright future. The company has had trouble in the past, but its new majority-owner and chairman, Lawrence Stroll, has deep pockets and seems to be committed to the business. The firm’s new CEO, who was recently appointed by the chairman, is also well regarded in the automotive industry.
The new management doesn’t guarantee that Aston Martin shares will take off, but such an experienced team suggests the group is now in safe hands. If they can successfully bring the new models to market over the next two years and continue to improve the automaker’s financial position, the outlook for the stock seems positive.
As such, now could be a great time to buy Aston Martin shares as part of a well-diversified portfolio. As I noted the last time I covered the company, the carmaker’s brand alone could be worth as much as £2.6bn, which suggests the stock could offer significant upside from current levels despite recent gains.
Owning the shares in a diversified portfolio would allow you to benefit from this upside potential while minimising downside risk.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.