Global toll road operator ALX gained +1.75% on Thursday, a few cents below its one-year high. It’s had issues in the last few years, but while interest rates are set to fall, the stock looks well-positioned:
- The company should be able to refinance its high debt levels at attractive levels as interest rates decline.
- Traffic volumes on its toll roads have been recovering, particularly in France (its largest market), as the move away from WFH continues across the globe.
ALX is well-positioned to maintain its 40c dividend over the coming years, putting the stock on an attractive 7.66% yield. The damage is over on the downside, and the risk-reward ratio looks particularly attractive on any dips toward $5.
- We expect ALX to test $5.50 in 2025 while delivering investors an attractive dividend in September.
MM is bullish ALX around $5.20
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