How To Buy Aston Martin Shares (LON:AML)

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To buy Aston Martin shares, you need a stock broker to execute the order and hold the shares in like Hargreaves Lansdown, AJ Bell or Interactive Investor. However, as Aston Martin is one of the most followed companies and can either be one of the best or worst performing shares on the market, there are a few things you need to be aware of. This guide will explain how to buy Aston Martin shares and what to watch out for.

🧑‍🎓Follow these five steps if you want to buy shares in Aston Martin:

  1. Open an investment account with a stock broker that offers access to the LSE market where Aston Martin is traded, like Hargreaves Lansdown, AJ Bell or Interactive Investor.
  2. You will need to fund your via a debit card or bank account.
  3. Search for Aston Martin shares with the epic symbol “AML”.
  4. Enter the number of shares you would like to buy (some platforms also let you enter a monetary amount and round the amount of the shares down to the nearest whole one).
  5. Click buy and you will own Aston Martin shares.

🤔Note: Aston Martin shares are volatile

UK car manufacturers are notoriously bad performers on the stock market. Why is the country so bad at managing a car company? The UK used to have plenty of car brands, from the top-notch Rolls Royce to Mini to Jaguar. These brands are still in existence, but they are mostly foreign-owned now. In this regard, Aston Martin is no different.

⚠️What to watch out for! Fundraising

Aston Martin recently raised £216m on PrimaryBid, through new shares offered at a discount to the current market price. This can have a negative effect on the share price.

What is the live Aston Martin (LON:AML) share price?

The current Aston Martin (LON:AML) share price is 170.03p which is a change of -3.57 or -2.06% from the last closing price of 170.03 with 611,261 shares traded giving Aston Martin a market capitalisation of £1,400,475,038. The most recent daily high has been 180.7 and daily low 167.5. The Aston Martin share price 52 week high has been 396.2 and the 52 week low 162.7. Based on the most recent Aston Martin share price opening of 170.03, the current Aston Martin EPS (earnings per share) are 0.65 and the PE (price earnings ratio) is n/a.

Pricing data automatically updates every 15 minutes

How much does it cost to buy Aston Martin (LON:AML) shares?

Buying one LON:AML share costs 170.03p. However, as well as the 170.03p cost of buying the shares you will also have to pay stamp duty, commission when you buy and sell shares and custody fees for holding your shares on your account. You also have to consider the difference between the bid price (the price at which you sell shares) and the offer price (the price at which you buy shares). These fees vary depending on what sort of account you open, and with what broker.  You can compare the different costs associated with the different types of trading and investing accounts in our comparison tables below.

Pricing data automatically updates every 15 minutes

Are Aston Martin shares (LON:AML) a good investment?

Just over a year ago, the luxury car company was tottering under immense pressure. Its revenue and profit outlook were so poor that the market heavily punished Aston’s share price. In just 18 months, the only car making stock in London Stock Exchange collapsed from £8 to £1 – a staggering decline of 87%. No one knew then how low would AML go. It was touch and go.

This year is a far more positive period for the Gaydon-based company. AML’s share prices have rebounded significantly.

A quick glance at the FTSE 350 performance table shows Aston Martin in the top spot, sporting a hefty +74% gain. Currently, each AML share fetches about £3.30, despite having corrected somewhat from the £4 resistance.

Is Aston Martin a good investment?

The answer depends on your investment horizon. For the past year, AML’s share momentum has turned remarkably bullish. Investors who bought AML shares in the past year or so are probably sitting on good profits. Strength begets strength. AML’s recovery uptrend may continue to attract newer investors.

Another positive note is the gradual increase in the UK car output, which appeared to have hit rock bottom last year. In June this year, for example, car output has increased to 822 thousand. This is higher than the previous year. Perhaps this output number will continue to grow (see chart below).

The last point worth highlighting is that there is a new buyer in town: Geely (China). The China-based company is gradually accumulating equity stakes on Aston Martin. It started buying into AML last year and this year upped its stake to 17%. This is a major acquisition for the company and leads to a further consolidation of AML shares. More shares into ‘sticky hands’, so to speak.

But bear in mind that since the 2018 IPO (prospectus here) Aston’s shares have been an utter disaster. Many long-term holders are still suffering from massive dilutions in the past few years. Aston is just not so good at managing car factories profitably.

Just this month, Aston diluted its equity again with a raise of £216 million through a placing with institutional and retail investors. This new equity will be used to reduce long-term debt and increase its day-to-day working capital (results here).

In addition, the premium car sector is a highly competitive one. I am not so sure if Aston can survive as a prosperous independent entity for long. Remember this: In its 90-year corporate history Aston Martin had gone bust 7 times . The brand did survive to this day, but many of Aston’s former owners have lost their shirts.

Therefore, I would be wary of making a long-term investment case for the loss-making Aston Martin.

Source: SMMT (Jun 2023)

Aston Martin’s Long-Term Prospects

Are Aston Martin’s shares a good long-term investment? Based on the cyclical outlook for the UK auto market, the short answer for most investors is a not good. A few reasons dictate this bearish arguments.

Culturally the country – despite having a large and developed market – is just not suited to owning or operating a local car brand. I have no idea why. Many UK-based car companies have fallen by the wayside. Perhaps the country is better at selling cars.

Look at Autotrader (AUTO). The online car listing website is worth 2-3x AML’s market capitalisation (£5 billion vs £2 billion). And unlike Aston Martin, Autotrader is generating good profits (operating profits totalled £330 million last year).

Even car dealers appear to be better investments than AML. For example, the Canadian Alpha Auto Group recently bought Lookers (LOOK) in a £460+ million deal. Other car dealers listed in the LSE are Pendragon (PDG) or Vertu Motors (VTU); these stocks did not suffer as much as Aston’s share price. If given a choice I would be more inclined to buy other auto-related stocks apart from traditional car manufacturers.

If you insist on buying premium car stocks, have a quick look at Ferrari (US:RACE) or Porsche (GER:P911). The latter was listed with much fanfare last year and saw its share price rise by 50%.

In a nutshell, Aston Martin is a loss-making niche car manufacturer in the UK. Its long-term price trend remains fairly bearish. See how deep its drawdown from the 2018 IPO currently is (in excess of 90%). Unless AML can turn around its business model, I would watch to offload some shares on a further rally.

One positive. potential I can see on the horizon is that other stronger car brands absorb Aston Martin. How will this happen is anyone’s guess. But then this is a trader’s proposition rather than an investment case.

If you have some spare cash, perhaps buying a head-turning Aston Martin sports car (DB12 Volante is just out) is better than buying Aston Martin’s shares. At least the car will leave you with a smile.

 

Aston’s shares have done surprisingly well in 2023.

Earlier this year, I commented that ‘while Aston Martin’s stock is ill-suited for long-term investors, it does not mean there is no trade to be had occasionally.’

The oversold rebound had occurred. Prices have surged 2-3x from 100p, making it one of the best stocks in the market this year.

Technically, AML’s medium-term trend is bullish. The stock affirmed the 150-day moving average as support twice already this year. Given the still-intact bull trend, I expect another affirmation into the trend indicator at around 300p. The stock is current correcting from the 400p resistance (see below).

If that sideways support fails, it may signal the end of oversold rally. When prices trading near/below the recent equity raise price, this may trigger stop losses.

From the risk-reward perspective, I would watch to dip into the stock at around that support band (280-300p). Tight stops recommended.

 

Unprofitable

No doubt, Aston Martin is a premium brand that produce sleek, appealing cars. But the company just cannot make a profit from selling these cars.

Aston’s unit volume last year was in excess of 6k. The average selling price is about £200k. Revenue is rising year-on-year, but so is its operating losses. AML’s net debt has shrunk to £0.85 billion and its free cash flow is a negative £218 million (see below). In other words, every car AML sold is a financial loss.

Hence, the company took advantage of the current bullish sentiment to raise another chunk of capital via equity (£216 million). This is to strengthen its balance sheet and provide more working capital into 2024.

Whether or not AML is overvalued now is beside the point. The stock is always vulnerable to further dilutive actions because of its negative free cash flow. I would pay more attention to the market’s verdict on the company than its historical financials.

Source: Aston Martin plc (2023 Presentation)

 

Precarious Finances

Despite its precarious finances, Aston Martin’s shares have rebounded over the past few quarters.

Three reasons are behind this rebound:

  • Oversold technicals – as prices had slumped by more than 80% in the preceding 18 months (2021-2022).
  • New buyers – Geely from China started to buy into AML last year and it has increased its stake to about 17%; another is the equity injection by PIF. This reduced the possibility of the company hitting the wall.
  • New UK administration – led by PM Sunak, which led to a loosening of the debt conditions and a rebound in Sterling. Favourable macro conditions lead to a rebound in deeply oversold shares.

Taken together, AML’s share price rallied by more than 250% from 100p.

Forecast

Analysts’ prediction of a company share price often depend on the market.

Just a year ago, many brokers were deeply skeptical on AML’s ability to weather the difficult consumer environment. Few rated AML Buy or Outperform. However, after a sharp bull run, many have become more upbeat about the luxury car company.

Therefore, I would not be surprised if the balance of opinion shifts again in the future. In times of uncertainty, many look to the market for validation.

Among the 11 analysts, the median price target is 400p.

Source: Financial Times

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