Vallourec is a global leader in the production of seamless steel tubes and specialized tubular solutions, primarily for the energy markets (oil and gas, electrical power) and industry. And on the stock market, Vallourec shares still have strong potential, judges James D. Touati (known as Le Loup de Zurich), consultant, trainer and trader, requested by Capital. Vallourec had already hit the headlines around twenty years ago. Remember Vincent Bolloré, who entered Vallourec shares in 2002 and exited in 2005 with a big profit.
The Breton tycoon then managed to reap a capital gain of 1.7 billion euros in three years for an initial investment of only 160 million euros. “It’s a bit like winning the lottery, but in the Breton trader version: stubborn, tenacious, and with a business sense sharper than an oyster knife! However, Vincent Bolloré could have tripled his gains if he had waited for Vallourec’s all-time high in June 2007, with a course at 1,007 euros. It’s the “game”, without regrets of course», Notes the expert.
Stock market: points to watch out for before investing in stocks
Apollo resold its Vallourec shares to ArcelorMittal at a large profit
But wait, the party isn’t over! The Apollo investment fund, “this American fund which thinks it is Apollo itself, arrived at Vallourec’s round of funding in 2021. These Yankees must have said to themselves: “Hey, if the Bretons did it, why not us?” And bam! Three years later, they resell on August 6, 2024 their 28.4% share in Vallourec to ArcelorMittal for 955 million euros, with the stake doubling in three years! It’s as if you had bet on a one-eyed horse and it won the Prix d’Amérique!», quips James D. Touati.
What stock market potential for Vallourec, according to technical analysis?
From the point of view of technical analysis (graphical and mathematical analysis to predict the probable trajectory of the stock price), several classic configurations (bullish harmonic figure known as Crab, ascending triangle and exit from the top of a trading range – horizontal price fluctuation band – horizontal) plead a priori in favor of a bullish scenario, more likely than an unfavorable scenario. The upward bias is stronger on Vallourec shares, judges the Wolf of Zurich in this regard. An equity investor can thus a priori aim for the objectives of 20.81 euros, 25.43 euros, 29.42 euros and 39.18 euros in the medium term (i.e. a stock price which could more than double at this deadline), as shown in the graph. In the event of a disappointing downward trend in the stock, the possible targets would be 14.28 euros, 13.11 euros and 10.85 euros, specifies the expert.
© Tradingview Chart: The Wolf of Zurich
– Vallourec: price evolution and technical analysis
The great circus of Vallourec restructuring
Vallourec has implemented a transformation plan called “New Vallourec” since 2022, aiming to improve its profitability and resilience. This plan notably includes the closure of sites in Europe (Germany, Scotland, France) and the transfer of part of production to Brazil, a refocusing on products with high added value and a reduction in costs. The financial results for 2023 already show improvements: a record gross operating surplus (EBITDA) of 1.196 billion euros and a halving of net debt to 570 million euros, appreciates the Wolf of Zurich.
In summary, Vallourec, “this steel tube giant has decided to give itself a makeover with its “New Vallourec” plan. It’s a bit like your paunchy uncle deciding to take up CrossFit at age 60. Ambitious, right? What are they doing? They close factories in Europe as if they were bars after the lockdown kicks off, and off to Brazil! Of course, there, the carnival all year round must boost productivity!», quips James D. Touati.
Vallourec figures that make shareholders’ eyes shine
Vallourec has a zero net debt objective by the end of 2025 at the latest and is aiming for a resumption of dividend payments next year (80 to 100% of cash flow generated in 2024) as well as diversification into new energies (hydrogen, CO2 capture, geothermal), which could represent 10 to 15% of EBITDA by 2030. Vallourec also aims to continue its refocusing on premium products with high added value. James D. Touati, however, underlines the uncertainties surrounding the evolution of the oil and gas market, Vallourec’s main outlet.
In summary, 2023, “it was the year when Vallourec pulled out all the stops: an EBITDA of 1.196 billion euros – Champagne! (Well, Cachaça, since we are relocating to Brazil) – and a debt halved. It’s as if your mother-in-law suddenly decided to only come every other weekend!», quips James D. Touati. And Vallourec promises us mountains and wonders: “zero debt by 2025 – as likely as me winning the New York marathon, but hey, let’s dream a little! – and dividends in 2025 – yes, yes, and I will be the next James Bond. And finally diversification into new energies. Because when you are an expert in pipes, you obviously master hydrogen and CO2 capture, that’s obvious!», Underlines the expert.
Stock market: why invest in stocks for the long term
On the stock market, Vallourec retains potential on the stock market, according to the financial analysis
Vallourec shares have experienced significant volatility in recent years. And financial analysts are generally positive, with an opinion of outperformance (on average) and an average target price (fair price estimated on average by the financial community) coming out at around 19 euros. According to Le Loup de Zurich, the main risks identified for Vallourec shares are: its dependence on the oil sector, the execution of the transformation plan and competition from other players in the sector. In conclusion, “remember: Breton flair is like good wine, it gets better with time. And if you want to succeed on the stock market, do like Bolloré: be stubborn like a Breton, patient like a fisherman from Saint-Malo, and cunning like a business fox. And who knows, maybe one day you too will turn pipes into gold!», hopes the Wolf of Zurich.
Already big gains on the stock market on Vallourec for Momentum readers
Readers of Momentum, Capital’s daily premium investment letter on the stock market, have already been able to make significant rapid gains on Vallourec shares on the stock market. Discover in Momentum our latest bullish anticipation on Vallourec. And discover our scenarios every day on the CAC 40 and on stocks listed on the stock exchange. By opting for an annual subscription, benefit from 5 months free. To benefit from it, simply click on the link inserted above in this article.
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