Chinese electric vehicle manufacturer NIO (NYSE: NIO) has made a name for itself over the past few years. The business came to prominence in 2020, rising over 1,100% during this period. However, the last 12 months have been more humbling for the stock, as it has plummeted 55%.

The NIO share price dropped as low as $12 in the past year. But with it currently sat at $19, is now the time to buy?

The year so far

One reason NIO has seen a fall is because of red hot inflation. Higher rates have a bad impact on the value of future earnings. And to add to this, growth stocks, a group of which NIO is a prominent member, also take a hit during volatile periods like now. This is because investors shy away from high-risk investments in search of safer places to store their cash.

Spiking inflation also leads to higher interest rates, as central banks look for ways to control the blaze. For a stock like NIO, which borrows heavily to fuel growth, this is also bad news as this debt becomes more expensive.

More specifically, the business has also seen its operations hit by supply chain issues. As China continues to grapple with Covid, NIO has seen its production come to a halt for periods this year. This will more than likely have a negative impact on NIO’s sales figures for 2022.

Wider outlook

While the firm has faced multiple pressures year-to-date, there are other factors to consider.

One of these, which is difficult to ignore when considering buying NIO shares, is its impressive growth. 2021 saw revenues increasing 122% year-on-year. And even in 2022, despite the issues mentioned above, the business has managed to post fairly strong delivery figures. As a potential buyer, this is encouraging.

However, one issue for me is competition.

This doesn’t only apply to NIO, but to all EV manufacturers. And while I believe there are plenty of opportunities within the sector, as this space continues to grow, competition will naturally heat up.

This can be seen through established manufacturer Volkswagen, which has already made headway in the industry. While Ford has also pledged a commitment to be all-electric by the end of the decade.

As governments worldwide make larger pushes towards an electric world, this competition will only become fiercer. As a result, NIO may struggle to maintain its impressive growth. There’s little doubt this would mean its share price suffering.

With this said, NIO may sustain a competitive advantage through its battery-swapping technology. The firm describes it as a “fully-automatic battery swap in just a short coffee break,” as the technology allows users to swap out their empty battery for a fresh one in the space of minutes.

Would I buy?

NIO’s growth is incredibly impressive. And with its cutting-edge technology, it may be able to stay ahead of competitors. However, I won’t be buying the stock today. Increasing competition worries me. And with concerns surrounding the Chinese economy at the moment, I don’t think now is the time to for me to dive in.

I’ll be keeping NIO on my watchlist for now. Should its share price fall in the months ahead, I may be tempted to open a small position.

The post The NIO share price continues to fall. Should I buy? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Electric vehicle (EV) manufacturer NIO (NYSE: NIO) has been one of the best-performing stocks over the past few years. For example, the stock saw monumental gains in a Covid-struck 2020, rising over 1,000%.

However, 2022 has seen the share price plummet 60% as a compiling number of pressures have dented investor confidence surrounding the firm. In fact, since its all-time high back in January of last year, the stock is down a whopping 78%.

So, why has the NIO share price seen such a drop? And does this fall mean an opportunity for me to buy NIO shares? Let’s explore.

Why is the NIO share price down?

Well, the share price has seen a drastic drop for a few reasons.

Firstly, Covid cases in China are skyrocketing. As a result, cities such as Shanghai have entered extreme lockdowns. There are also concerns that similar rules may be applied to Beijing. For NIO, this has seen major disruptions to its supply chain as last month the business announced it had suspended production of vehicles. To counteract the fall in production, NIO increased the price of three of its SUVs. The share price fell 9% on the back of the news, reinforcing the lack of investor confidence surrounding the firm.

Secondly, NIO has seen a fall in price due to the possibility of its delisting from the US exchange. This is because the firm does not meet certain criteria for foreign stocks, most significantly on accounting issues and the Holding Foreign Companies Accountable Act. With delisting now a serious threat, the stock has dropped considerable amounts as a result. 

Wider outlook

With this said, there are positives I see with NIO. As a long-term investor, short-term concerns such as supply chain issues do not worry me. NIO has already begun to speed up production again. And this is seen through the delivery of its new ET7 model. Should this continue, it should hopefully help get the business back on track.

Further, NIO has posted some impressive results in recent times. For its full year, revenues increased 122% year-on-year. While growth is expected to slow in 2022, this highlights the potential of the firm. 

However, concerns such as competition deter me from buying NIO stock. As the EV space continues to grow, it may struggle with its plan for expansion. With more established manufacturers such as Volkswagen making moves in the sector, this could harm the market share NIO sees in the future.

Rising interest rates spell further bad news for it. In uncertain times like these, growth stocks tend to be hit the hardest. Hiking rates also make the debt it finds itself with more challenging to pay off. A continuation of this could see the NIO share price suffer.

What I’m doing

As much as the supply chain issues have impacted its share price, as a long-term investor this does not deter me from the stock. However, what does worry me is the growing threat of delisting. I think this, along with rising interest rates, could see the NIO share price fall further. As a result, I won’t be buying the shares today.

The post The NIO share price has plummeted 60%! Here’s what I’m doing now appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Flying high

Sure, car and plane-part builder GKN (LSE: GKN) may have been swept higher by the buying frenzy engulfing London’s blue chips. But I reckon the business still provides stunning value at current share prices.

An expected 1% decline in 2016 leaves the business dealing on a P/E rating of just 11.1 times. And a predicted 11% bottom-line rebound in 2017 drives the multiple to a mere 10 times. By comparison, the historical FTSE 100 stands closer to 15 times.

On top of this, chunky dividends of 3% and 3.1% for 2016 and 2017 respectively provide a tasty sweetener for income seekers.

GKN’s share price is yet to fully recover after the Volkswagen scandal gripped the financial pages last year — the component builder is a major supplier to the German auto ace. And fears over a possible cooldown in Chinese car sales have also crimped investor appetites.

But I’m encouraged by the resilience of the firm’s Driveline division, and believe it has what it takes to navigate any road bumps. Organic sales growth of 5% during January-June outstripped current car building rates, helped by an increase in the amount of equipment GKN loads into its clients’ vehicles.

In addition, I’m convinced demand at the company’s Aerospace unit should explode in the years ahead as civil aircraft build rates rise. Indeed, last year’s acquisition of Dutch giant Fokker has significantly bolstered GKN’s status as a critical supplier to the world’s top plane-builders.

I reckon the Redditch firm is a great pick for those seeking electric earnings expansion in the years ahead.

Delicious value

Telecoms heavyweight BT Group’s (LSE: BT-A) terrific momentum in the fast-growing quad-play entertainment sector was confirmed in July’s quarterly update.

Helped by its acquisition of mobile giant EE in 2015, BT saw revenues at its Consumer division climb 9% in the three months to June, to reach £1.18bn.

The London firm advised that integration of its new mobile unit had “performed strongly, both financially and commercially,” while demand for its internet services also remains strong — BT accounted for 79% of net broadband additions during the quarter. And retail demand is likely to remain strong as its BT Sport channels drive demand for its television proposition, in my opinion.

BT’s long-running growth story is anticipated to screech to a halt in 2016, according to City forecasts, with a 10% earnings decline currently expected. But this figure still creates a big-cap-beating P/E rating of 13.6 times. And the multiple slips to 12.5 times for next year thanks to a projected 8% earnings recovery.

And BT’s splendid cash-generative qualities — allied with an expected decline in capex bills — are expected to keep the company’s progressive dividend policy in business. The telecoms play carries pumped-up yields of 3.8% for 2016 and 4.2% for next year.

I reckon BT’s upward momentum in a fast-growing marketplaces makes it a terrific selection for growth hunters.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK owns shares of GKN. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Here are three shares that you should buy right now.

AstraZeneca

Five years ago, most investors wouldn’t touch pharmaceutical firm AstraZeneca (LSE: AZN) with a bargepole. With several key drugs tumbling down the patent cliff, and a disappointing drugs pipeline, this company’s share price was plumbing the depths. The heyday of Big Pharma looked to be past.

But chief executive Pascal Soriot has turned round the fortunes of this drugs giant. A focus on world-class research, cutting edge biotechnology, and the development of money-spinning anti-cancer treatments have sparked a revival in profits, and the share price. It’s no surprise that Pfizer recently tried to buy AZ. This is one of the pharmaceutical industry’s most prized assets.

Yet the share price is off its highs, and I think there’s more to come from this dividend dynamo. A 2016 P/E ratio of 14.54 and an income of 4.82% look good value.

Volkswagen

The emissions scandal that has hit Volkswagen (XETRA: VOW) over the past year has sent the share price tumbling. Yet my view is this ‘crisis’ is no worse that what carmaking rival Toyota went through just a few years ago and today Toyota is the most successful car firm in the world, its recall scandal already forgotten.

Anyone who has seen the new Audi A4 and the Volkswagen Passat will know that Volkswagen makes some of the best cars in the world. It doesn’t look like a business that’s going down the tubes.

That’s why I think Volkswagen is currently oversold, and is a strong contrarian buy. A P/E of 9.56, with a dividend yield of 3.99%, means this is a bargain that shouldn’t be missed.

Carillion

Carillion (LSE: CLLN) is one of Britain’s leading building and support service firms, and is highly profitable. It’s set to gain as a resurgent Britain invests more in its infrastructure over the coming years.

It made a net profit of £139m in 2015, and earnings are set to advance further. Yet this is a business going dirt cheap. The 2016 P/E ratio is 8.37, with a dividend yield of 6.79%.

By any measure, these are enticing numbers, and you should buy Carillion both for growth, and for the dividend.

The post There Has Never Been A Better Time To Buy AstraZeneca plc, Volkswagen AG And Carillion plc appeared first on The Twelfth Magpie.

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Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

WASHINGTON, DC — At a press conference held on Thursday to give an update on the company’s emissions scandal, Volkswagen‘s new CEO outlined an extensive reorganization plan that will seek to make the company more agile and collaborative.

But, he said, the reorganization won’t work without a new mind-set on the part of VW’s employees. It’s strongly reminiscent of a major shift undertaken by one of VW’s rivals, the Ford Motor Company, not long ago.

Mueller: VW needs a dramatic shift in culture
“We can have the best people, and a great organization, but we can do nothing without the right attitude and mentality,” Mueller said on Thursday.

What does that mean? It means more open discussions, closer cooperation, and a willingness to allow mistakes, he said. And it also means giving more authority to people at lower levels of the organization.

These are all seismic changes for Volkswagen, which for years was run under the autocratic, detail-obsessed leadership of now-retired chairman Ferdinand Piech. Piech, a member of the Porsche family that owns a controlling stake in VW, was credited with building the company into one of the world’s largest automakers. But at the same time, he apparently fostered a corporate culture that did not tolerate mistakes or failures.

That may have been a factor in the emissions scandal. It’s easy to imagine a group of engineers, under intense pressure to deliver a “clean” diesel at a certain cost but unable to find a way to meet all of the program’s goals, deciding to embed a cheat deep in the engine’s software. Perhaps that decision saved their jobs at the time, but at a steep cost to the company.

Mueller wants to change VW’s culture so a situation like that can’t happen again. It’s a shift that’s strongly reminiscent of one initiated by another newly appointed automotive CEO back in 2006, Ford’s Alan Mulally.

Such a shift is possible: Ford did it
Ford was a notoriously difficult place to work when Mulally arrived in 2006. Executives were in fierce competition with one another, and any admission of a problem was seen as career suicide. It wasn’t quite the same as VW’s culture, but it was similar in this sense: Everyone was under pressure to succeed, or else.

That changed, famously, when a Ford executive admitted in a big meeting that a new-vehicle program wasn’t on track and that he needed help. Instead of chewing him out, Mulally applauded. (By the way, it was hardly career suicide for the executive in question: Mark Fields succeeded Mullally as CEO).

Fostering a collaborative, mistake-tolerant approach was one part of “One Ford,” the comprehensive plan created by Mulally and Fields to transform the company. It’s credited with not just rescuing Ford from dire straits, but with making the Blue Oval a solidly profitable and competitive company. (It’s also considered a pretty nice place to work these days — an important factor in attracting top talent.)

Unlike Ford in 2006, VW isn’t on the brink of financial ruin. But it’s facing a big crisis, and Mueller apparently sees it as an opportunity to transform the company for the better.

Can Mueller be VW’s Mulally?
VW’s problems are different from what Mulally faced when he arrived at Ford. But the challenge is similar: How does a CEO go about transforming a company’s culture?

Mulally did it by consistently setting a good example and by making a point of praising and rewarding others’ efforts to get with the program. Executives who didn’t buy into the new collaborative approach were dismissed; those who did now play key roles on Ford’s leadership team. In time, the approach became the standard throughout the company.

Thursday’s press conference was our first look at Mueller since he became VW’s CEO. He was impressive: Unlike past VW leaders (and unlike VW chairman Hans Dieter Poetsch, who opened the press conference), who were imposing and brusque, Mueller gives the impression of being informal, collaborative, approachable.

He’ll need to lead VW by example to achieve the cultural change that he wants to see. It remains to be seen whether the powers that really control VW — the unions on one hand, the Porsche family on the other — will give him room to drive these changes.

But he seems like he might be the kind of leader who could pull this off. If so, VW’s future could look very bright. We’ll be watching.

The post Can Volkswagen AG’s New CEO Change Its Culture? appeared first on The Twelfth Magpie.

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The original author of this article, John Rosevear owns shares of Ford. The Motley Fool UK has no position in any of the shares mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

These firms churn out regular dividends, which are well covered by these profits. And large, stable businesses produce these profits and these dividends consistently.

Reinvest your dividends as they are paid out and, gradually, your investment grows. And here are three investments which I think could just fit that bill.

AstraZeneca

AstraZeneca (LSE: AZN) is one of my pharma company picks. I like the direction that chief executive Pascal Soriot is taking the business, towards high-value, research-intensive, biotech drugs.

The high quality of science undertaken by AZ is showing through in this company’s strong drug pipeline. What’s more, many of these medicines are in the field of anti-cancer treatments. This is one of the fastest growing segments of the pharmaceutical industry.

But it is not all about high value patent-protected medicines. An increasingly wealthy China and India are dramatically broadening the marketplace for pharmaceuticals. This bodes well for the future of pharma.

I think that this firm is fairly priced, with a predicted 2015 P/E ratio of 14.43, and a juicy dividend yield of 4.58%.

Admiral

Admiral (LSE: ADM) is an insurance company that owns brands such as Confused.com, Diamond, and a range of overseas price comparison and insurance websites across Europe and North America such as Rastreator and LeLynx.fr.

Price comparison and online is the fastest growing, but also the most competitive, sector of the insurance market. And this has pushed Admiral’s share price higher. Price comparison is yet to boom in countries like France and Italy as it has done in Britain; when it takes off, this could be the next stage of this company’s growth.

The P/E ratio of this business in 2015 is forecast to be 15.29. But what is most enticing about this investment is the dividend yield, which is a stonking 6.12%. This is basically an online company with low fixed costs, which means it can pay out more of its profits in dividends. So this income is, I think, sustainable over the long term.

Volkswagen

A few years ago, Toyota had a few difficulties. Remember the recall crisis of 2009-11? A range of faults including sticking accelerator pedals and faulty brakes meant millions of cars had to be repaired.

At the time, the damage to Toyota’s reputation seemed devastating. In the depths of the crisis the share price fell to 2926 yen. Yet what went wrong was simply fixed. The share price had recovered to 9000 yen by early 2015 — more than tripling. Toyota is now once more the world’s leading car company. Perhaps the damage was not so irreparable after all.

Volkswagen‘s situation at the moment also looks difficult. But I see this not as a Deepwater Horizon disaster, but as another Toyota. Cars will have to be recalled, and their software reprogrammed. And after a few years, I suspect the scare will have been all but forgotten.

Volkswagen’s share price has now fallen to 125 euros. It has virtually halved from a price of 245 euros earlier this year. But the canny contrarians amongst you will see that this is the time to buy, not sell.

The P/E ratio is now a very cheap 5.69, with a dividend yield of 3.94%. This is a strong buy for me.

The post AstraZeneca plc, Admiral Group plc & Volkswagen AG: My 3 Dividend Shares To Buy Right Now appeared first on The Twelfth Magpie.

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Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Investor sentiment for platinum has returned as further delays in Federal Reserve rate hikes have dented the value of the US dollar. Indeed, the Dollar Index — a measure of the greenback versus a basket of currencies — struck seven-week lows just this week. In addition, platinum has been caught in the gold price updraft, the yellow metal having advanced 7% during the past couple of weeks, too.

With buyers now charging back into the precious metals markets, could now be the time to pile back into embattled platinum group metal plays Lonmin (LSE: LMI) and Jubilee Platinum (LSE: JLP)?

Prices primed to pump higher?

Well, Bank of America-Merrill Lynch certainly feels that platinum could be in for strong price gains in the months and years ahead. The broker expects an average price of $1,065 per ounce for 2015 to advance to $1,100 next year, before marching to $1,250 in 2017 and $1,425 in 2018.

Bank of America believes that Chinese platinum demand has now stabilised, and fully expects physical off-take from the jewellery and autocatalyst segments to rebound strongly next year, pushing the market into deficit.

However, the broker acknowledges a range of factors that could keep platinum prices under the cosh. Adding to the risk of rising prices on jewellery demand, and lower sales to European buyers, Bank of America notes that “producers in South Africa need to show more production discipline,” adding that “putting more ounces into the market at lower cost is not a recipe for success.”

Lonmin responded to such calls in July by announcing it was reducing production by some 100,000 ounces each year by 2017, achieved through the closure of its Hossy and Newman shafts in South Africa. And Glencore announced just this month it was closing its Eland mine in the country.

Auto demand set to dive?

Although a welcome step in the right direction, I believe the platinum market remains a risky bet at the current time.

As Bank of America notes, demand from Europe remains a critical factor for metal prices looking ahead. And with the fallout of the Volkswagen emissions-rigging scandal threatening the future of the diesel engine — 48% of platinum demand comes from autocatalyst builders — sales to this key European-centric market could nose-dive in the years ahead.

On top of this, the likes of Lonmin also face the ongoing problem of breakneck cost inflation. Lonmin itself has taken the decision to concentrate on immediately available ore reserves for mining activities, but the issue of rising wages, power tariffs and general operational costs remain a millstone around the industry’s neck. When you throw in the potential for fresh strike action — a common problem in South Africa’s mining sector — costs are in danger of spiralling still higher.

Platinum prices have risen as quickly in recent weeks as they had previously fallen, reflecting the volatile nature of market sentiment at the current time. Should further disappointing data emerge from China in the near-term, I believe the metal — and consequently shares in Lonmin and Jubilee Platinum — could be sent hurtling lower once again.

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Vedanta Resources

Shares in Vedanta Resources (LSE: VED) received another hefty whack last week, the business having fallen an extra 13% during the period. The metals and energy play has conceded 55% of its value in the past 12 months alone, and I believe more weakness can be expected amid worsening supply/demand balances across commodity markets — indeed, Brent oil is tracking back towards six-year troughs and was recently around $47 per barrel in Monday business.

Accordingly, Vedanta Resources is expected to see losses widen from 14.2 US cents per share in the 12 months to March 2015 to 27.3 cents in 2016. And I do not believe the situation will improve any time soon. Like much of the sector, Vedanta Resources remains determined to keep swamping the market with excess material, and the firm’s zinc, copper and aluminium output kept chugging higher in April-June. I reckon the resources giant carries boatloads of risk with the likelihood of very little reward.

Shire

Like Vedanta Resources, pharma play Shire (LSE: SHP) also endured a week to forget and conceded 1% in the last five-day trading period. But unlike Vedanta, I reckon the business provides plenty of upside for savvy investors thanks to a combination of Shire’s brilliant product pipeline and the massive potential of galloping global healthcare demand.

Investors should also take heart from news that a US appeals court upheld the patents on Shire’s earnings-driving Vyvanse drug late on Thursday. The news means that the Dublin firm will avoid generic competition on this particular label until 2023 at the earliest. Massive R&D investment helped to deliver a double-digit underlying revenue advance in January-June, and the City expects this solid trend to continue, pushing a 34% earnings slip this year to a 16% rise in 2016. Consequently Shire’s P/E multiple of 19.3 times for 2015 falls to just 16.7 times for the next period.

Johnson Matthey

Thanks to the turbulence caused by the Volkswagen emissions-rigging scandal, precious metals refiner Johnson Matthey (LSE: JMAT) was on the wrong end of a bruising during Monday-Friday and shares conceded 1% in the mini-period. The business had an end-of-week flurry to thank for just a mild downtick, although investor sentiment remains patchy as the German car giant’s fake test results have cast doubts on the future of the diesel engine.

Johnson Matthey is a major producer of catalytic converters for use in petrol, hybrid and diesel vehicles. But the latter is by some distance the most profitable sub-sector for the London-based business, meaning any adverse-legislation could put a huge dent in future revenues. Johnson Matthey is expected to enjoy earnings rises of 1% and 7% for the years ending March 2016 and 2017 respectively, leaving attractive P/E ratios of 13.9 times and 13.1 times. But shares prices could shunt still lower should sales projections come under fresh pressure.

Smiths Group

Shares in engineering leviathan Smiths Group (LSE: VED) also suffered adverse movements last week and the stock fell 6% in the period. The company dropped to its cheapest for more than three-years in the process, not helped by broker downgrades following its latest results — total revenues slipped 2% during the year to July 2015, to £2.9bn.

Smiths Group noted that “we expect global energy markets to remain challenging for the coming year, with depressed oil prices and significant market uncertainty,” a situation that would likely prove perilous for the top-line. With US hedge fund activist ValueAct’s mass share purchase last month also fuelling speculation over a possible breaking-up of the company, great uncertainty is likely to continue to swirl around the firm, a potentially-catastrophic situation for the share price.

The post Are Vedanta Resources plc, Shire PLC, Johnson Matthey PLC And Smiths Group plc Poised To Extend Last Week’s Losses? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

In fact, Volkswagen’s share price has fallen by almost 30% in the last week and, as such, many of its investors will be sitting on large losses. Looking ahead, it seems likely that there will be multiple investigations into the emissions tests and, as a result, the issue could drag on over a period of months and act as a brake on the future share price performance of the company.

Of course, if an investor in Volkswagen had ploughed all of his/her money into the stock, then their portfolio would have fallen by almost 30%. However, if they had purchased a number of other stocks alongside Volkswagen, say nine others, then their total loss over the last week would have been just 3%.

This highlights the importance of diversification. It limits the company-specific risk which a portfolio faces and, should there be a profit warning, challenging industry outlook or, as in Volkswagen’s case, disappointing news flow, then it can allow the investor to maintain a degree of downside protection on his/her portfolio.  

Clearly, buying more than ten stocks could be a good idea, since even a portfolio of ten companies is still relatively concentrated. Of equal importance, though, is to diversify among different industries within a portfolio, since they can offer different levels of performance at different times. For example, filling a portfolio full of mining stocks earlier this year would have led to severe losses, while buying only banks prior to the credit crunch would have crippled portfolio returns.

In addition, diversifying between different regions of the world is also of high importance. For example, in recent years many UK investors have focused on investing in companies with large exposure to China. And, while the world’s second-largest economy is still growing at a healthy 7%+ rate, uncertainty surrounding its longer term prospects has caused the valuations of China-focused stocks to come under severe pressure. As such, and while the Eurozone, for instance, may seem unappealing right now, it is sensible to mix up geographical location of stocks within a portfolio.

Similarly, buying solely high-yield or growth stocks can be problematic. That’s because rising interest rates may cause the valuations of high-yield stocks to come under pressure, while an economic downturn can put pressure on the growth prospects of highly rated stocks. Therefore, having a balance between the two within a portfolio can also make sense.

Of course, diversifying will not prevent losses entirely. However, it will allow your portfolio to absorb them more easily and prevent a complete wipeout which, realistically, can be very difficult for any investor to come back from.

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Peter Stephens does not own shares in any company mentioned in this article. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

It is estimated that around 11 million vehicles worldwide contain the technology, and Volkswagen has set aside €6.5bn to cover potential costs. But the final bill could far exceed this figure as a raft of investigations across the US, Europe and Asia are expected. And the damage to Volkswagen’s reputation could be much higher — VW America boss Michael Horn has admitted the news has “broken the trust of our customers and the public.”

Components creator on the rack

But Volkswagen has not been alone in seeing its share price tank as a result of the scandal. Indeed, car and auto parts builder GKN (LSE: GKN) saw its stock value haemorrhage more than 7% in Tuesday business, although it has recovered some ground and was recently 2% higher today.

Such weakness is understandable as the Redditch firm counts Volkswagen amongst one of its most important customers — around 15% of revenues at the firm’s GKN’s Driveline arm come from the carmaker, while its Powder Metallurgy and Land Systems divisions also build parts for Volkswagen.

Still, a report issued from UBS suggests that the share price downturn of recent days could be severely overcooked. The broker says that “while we do not know to what extent the reputational damage could hurt VW’s future sales, we believe the impact on GKN is likely to be trivial.” The broker estimates that even if Volkswagen sales were to fall 10% following the scandal, GKN’s total sales and profits would only be adversely affected by around 0.7%.

It is natural that GKN has shuttled lower as the scandal adds to existing worries over Chinese auto sales. But with an expected 7% earnings uptick for 2016 leaving the business dealing on a P/E rating of just 9.9 times, for many this could represent a prime buying opportunity.

Jubilee gives little cause for celebration

However, the fallout of the Volkswagen crisis has also led many to question the future of the diesel engine, a catastrophic scenario for the platinum market — just under half of total metal is used in catalytic converters to clean up diesel emissions. With regulators reassessing the impact of diesel fumes on air quality following Volkswagen’s admission, I believe platinum prices could be set to shuttle much, much lower.

Precious metals play Jubilee Platinum (LSE: JLP) has already seen its share price shake violently in recent times as investors have weighed up positive news concerning its two surface tailings projects against a volatile platinum price. Indeed, the business was recently dealing 9% lower in midweek business as the white metal collapsed to six-year lows below $930 per ounce.

With questions also raging over the future of platinum off-take for jewellery and investment purposes, I reckon the fanfare surrounding Jubilee Platinum’s “transformational” technologies could be swallowed up if metal prices keep on sinking.

Retailer’s outlook remains robust

Should Volkswagen suffer a significant demand slump in the wake of recent revelations, salesmen at British car dealership Inchcape (LSE: INCH) could be left shaking their heads in the coming months and years. The business is the German manufacturer’s largest single retail hub in the UK and operates 20 outlets offering vehicle sales and servicing.

Inchcape suffered an 3% share price decline in Tuesday trading as fears intensified but, like GKN, has fought back and was last around 1.6% higher on Wednesday. And with good reason — although the damage to Volkswagen’s image leaves it more susceptible than many of the FTSE’s other car retailers, the underlying strength of the car market should continue to drive sales at Inchcape higher, in my opinion.

The London firm saw total revenues edge 1.3% higher during January-June, to £3.4bn, helping underlying operating profit surge 5.6% to £159.2m. With UK and European vehicle sales stomping determinedly higher, and Inchcape boasting significant exposure to emerging markets across the world, I believe investors can look forward to solid long-term returns as global car demand steadily rises.

The post Could The Volkswagen AG Crisis Hammer GKN plc, Jubilee Platinum PLC & Inchcape plc? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Royston Wild owns shares of GKN. The Motley Fool UK owns shares of GKN. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.