The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.
Aston Martin (LON:AML) shareholders have had a bumpy ride over the last few years. However, there are signs that the luxury car-maker could be about to navigate its way out of trouble. Positive news events have already started to drive the share price up as investors buy in at record low levels.
This review will break down the reasons that Aston Martin shares might be a ride worth catching. It will also outline how to go about buying the shares using a trusted broker.
Aston Martin Lagonda Global Holdings Plc is a British-based manufacturer of high-end sports cars. The firm traces its history back to 1913 but has in recent years undergone significant changes.
Despite going bankrupt several times in its history, the iconic brand has such strength that it has always found new backers willing to resurrect it. The firms and individuals that have recently taken stakes in the company are part of the reason many tip the firm’s fortunes are about to improve.
Aston Martin was listed on the London Stock Exchange in 2018 and has a market capitalisation in the region of £2.6bn. It is a member of the FTSE 250 index where it trades under the ticker AML.
Lawrence Stroll not only owns a quarter of the firm’s shares but is also the CEO. Early signs are that Stroll’s methods could be working. His track record does, after all, include successful stints in charge of Racing Point Force India, Pierre Cardin, Tommy, Ralph Lauren and Michael Kors.
After reaching price levels as low as £5.50 in May 2020, the share price then increased by 252%. This is still some way off the all-time highs of £340 and the eye-watering proposition that the AML share price might hit those levels once more is generating a lot of buying activity.
The share price move is not the only indicator that something interesting is going on. During 2018 and 2019, the stock was little traded as price slid from its once high levels. Since the middle of 2020, the number of shares traded has increased dramatically.
This reflects some of the long-term holders bailing out of positions as new buyers come in. It also points to speculators trading the stock using shorter-term strategies.
Share price moves backed up by increased trade volumes are generally traded as being more reliable indicators of momentum building. Trade volumes peaked in June 2020 but have still held strong.
The cash-strapped firm isn’t one for those investors who like their targets to pay dividends. AML instead has a hefty amount of debt on its balance sheet, most notably a £1.1bn loan taken down in 2020 to weather the COVID-19 pandemic. The interest rate on that tranche of debt is an uncomfortable 10.5% and raises a key question for those considering buying AML shares.
If the life-saving support package is used to paper over the cracks, then the outlook for the firm is bleak. Any shareholders who bought into the firm in 2018 or 2019 will be painfully familiar with the phrase ‘a death by a thousand cuts’.
The alternative scenario involves the leading shareholders bringing about dynamic change and this could act as a catalyst for the Aston Martin share price. Factors to consider include:
The great news is that online brokerage sites have revolutionised the investment sector. They’ve made the process easy and low-cost. Good brokers provide research and learning materials to help you develop the skills needed to make a profit.
Once you’ve identified an opportunity, buying the shares is as easy as logging into an online platform and booking the trade. You can then access and manage your holding using desktop machines or mobile apps.
If you’re looking to buy-and-hold Aston Martin shares, then your research will likely focus on long-term fundamentals. This article on the life of a trade based on fundamental analysis gives an insight into tools to use and the approach to take. Research can be easily found online via your broker or third-parties.
This important step should not be overlooked. It’s an unfortunate reality that scammers operate in the sector, so choosing a regulated broker is a crucial first step. A list of FCA regulated brokers, which are trusted and offer clients a first-rate service, can be found here.
Trading the markets is risky enough without falling for the promises made by a disreputable broker and making the wrong choice here could mean you lose all your capital.
Regulated brokers have a duty of care to their clients, so the online registration process requires new clients to complete some Know Your Client (KYC) forms. This is so the broker can build a profile for you and ensure it treats you in accordance with market regulations. The process takes only minutes to complete and is actually a sign that you’ve made a good choice.
You’ll then be directed to the area of the site where funds can be paid into your trading account. Most brokers offer a variety of payment methods, including credit/debit cards. The different payment processes have different T&Cs, but it’s likely you’ll be able to find one that not only suits you but comes with zero fees and instant crediting of funds.
Trading dashboards at brokers all have similar functionality. There are monitors to help you track and analyse price and a trade execution interface where you input the details of the trade you want to execute. There are also different order types — these allow you to manage your trade entry and exit points.
You don’t need to use the different order types, but being aware of how they work can save you time and money. It’s also important to check if stop-losses or take profits are, for example, included as default settings.
Once you’ve inputted the amount of Aston Martin shares you want to buy and have reviewed the extra types of orders on your trade, execution is as simple as a click of a button or a tap of a screen. The AML share price is quite volatile, so finding a good entry point can improve your chances of making a profit.
A good habit to get into is to check the portfolio section of your account straight away to ensure what you actually bought matches what you intended to. Any errors are best corrected before the price moves too much.
The length of time you expect to hold your Aston Martin shares will determine whether you buy the shares outright or in CFD form. This research report on CFD vs Share Dealing explores that subject in greater detail. The general rule is that if you intend to hold your investment for months and years rather than days or weeks, you are probably better off buying shares outright. It is important to check this is the case at time of trade as backing out of a CFD trade and buying again outright incurs unnecessary transactional costs.
There is intense competition between brokers and this has driven down the costs associated with share dealing. The exact charges will be determined by the T&Cs on your account, but costs to look out for include:
|Live Account Fee||No charge||No charge||No charge||No charge|
|Demo Account Fee||No charge||No charge||No charge||No charge|
|Bid Offer Spread – AML shares||9p||No market||80p||No market|
|Cash Deposit Fee||No charge||No charge||No charge||No charge|
|Cash Withdrawal Fee||Yes – $5 per transaction||No charge||No charge||No charge|
|Inactivity Fee||Yes – $10 per month after 12 months inactivity||Yes – $10 per month after 3 months inactivity||Yes – $10 per month after 3 months inactivity||Yes – $50 per quarter after 3 months inactivity|
|FX Conversion Fee||Offers accounts in USD, only||Offers accounts in USD, GBP and EUR||Offers accounts in 14 base currencies incl. USD, GBP, EUR||Offers accounts in USD, GBP, EUR, CHF|
|Minimum Deposit||$200 (or equivalent)||$100 (or equivalent)||$250 (or equivalent)||$100 (or equivalent)|
Classic valuation models currently mark Aston Martin shares as cheap, so now could be the perfect time to buy AML shares. There are several potential catalysts in play and if some, or all, of those ignite, then a position in Aston Martin shares could be a profitable one.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage . 75 % of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money .