Constellium (CSTM), mcap=$1.6bn, price $11.18 vs $14.20

$CSTM pitch:
– Aluminum producer with exposure to the packaging, aerospace, defense, auto, and general industrial sectors.
– Macro headlines and European energy availability/concerns have weighed on the stock but the damage is too severe.
– The management team is executing well and focused on FCF.
– Company earnings are set to benefit from the recovery of aerospace earnings lost during covid, recently restructured beverage contracts as well as continued cost-saving initiatives.
– CSTM has materially reduced leverage and now has a favorable maturity ladder with ample liquidity.
– Cheap valuation across several metrics – the stock is at least double from current levels.

$CSTM valuation:
– Trades at a 10% FCF yield, 7% unlevered FCF yield, 5.8x Adjusted EBITDA.
– Sits 3.9x EBITDA of recently announced 2025 targets.
– Replacement value of €9bn+ vs. TEV of €4.1bn.

Exp. gain: +100%

Full CSTM write-up (free guest account required):

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