Valvoline is a "compelling" buy for investors ahead of a planned split, according to RBC Capital Markets. Analyst Steven Shemesh initiated coverage of Valvoline with an outperform rating, saying the oil change company is set to grow after it sells its global products division — which is expected to close in the next few weeks. "[We] think VVV will be a faster growing, higher margin business, with strong [free cash flow] generation," Shemesh wrote in a Tuesday note.
What's more, Valvoline is "generally insulated" from challenges in the broader economy, as consumers will continue to need oil changes and other maintenance services for their cars regardless of whether there's a recession, and its depth. The analyst expects Valvoline will have a "long runway of revenue growth and FCF" before greater electric vehicle adoption becomes an issue.