Quick Win by the Algorithm: Partnership With Volkswagen Bodes Well for NAV

Quick Win by the Algorithm

On June 10th, 2016, the I Know First algorithm issued a bullish forecast for Navistar International Corporation (NAV). NAV had a signal of 828.84 and a predictability of 0.67. As a result, in accordance with the forecast, the company’s stock increased by 126.02% in 1 year, showing a quick win by the algorithm.

quick win

Navistar International Corporation (NAV) is a global manufacturer of commercial trucks, buses, defense vehicles and diesel engines. The company operates in four principal industry segments: Truck, Parts, Global Operations, and Financial Services. As of October 31, 2016, it had approximately 728 outlets in the United States and Canada, and 94 outlets in Mexico. Navistar was founded in 1902, with its headquarters located in Lisle, IL. 

quick win

A major milestone for Navistar was its wide-ranging strategic alliance with Volkswagen, finalized on March 1, 2017. The deal included an equity investment by Volkswagen, whom acquired a 16.6% stake in Navistar. The companies are also engaged in a technology and supply collaboration, in which Navistar received the right to use Volkswagen engines in its vehicles. Furthermore, Navistar and Volkswagen formed a procurement joint venture to work on quality improvement and cost reduction. They will also work on expanding their global presence. In five years, Navistar expects this partnership to accrue $200 million in annual savings. Subsequently, Navistar’s stock soared as investors viewed the partnership as a major earnings and growth driver for the truck company.

Navistar’s stock gained further positive momentum when Baird analysts upgraded it from Neutral to Outperform. They are optimistic about Navistar’s growth potential from the Volkswagen alliance. Benefits from the deal can push Navistar to leverage higher volumes, larger profit margins and earnings. In addition, Navistar is already on the verge of rolling out new products in the next couple of years, such as its new long-haul Class 8 heavy-duty LT series trucks. Its plans to adhere to a timeline of introducing new products every four to six months will bring in a consistent revenue stream to sustain the company’s growth. Moreover, though the trucking industry entered 2017 with stagnation, many analysts believe that the sector will see a rebound in the second half of 2017. This potential upswing in the trucking market further enforces investor confidence in Navistar’s growth prospects.

Given these developments and conditions, we can see why Navistar’s stock increased.

Current I Know First subscribers received this bullish forecast on NAV on June 10, 2016. 

Before making any trading decisions, consult the latest forecast as the algorithm updates predictions daily. You can use the algorithm for intra-day trading. The predictability tends to become stronger with forecasts over longer time-horizons such as the 1-month, 3-month and 1-year forecasts.