Linamar Corp (LNR.TO)

It is very cyclical. Just play the seasonals. It will probably sit here until the end of February when there is a seasonal car buying trend.

This has done extremely well lately, and is up close to 60% last year. The environment has been really good. This really ties in with what has been happening in oil/gas. Lower gas prices would normally spur demand for automobiles. With the expansion we are seeing in the US economy, this may actually happen. However, this is selling at over 2.5% and almost 3% times BV and 14X earnings and 8X cash flow. You have to see continued growth going out for a while in order to justify those kinds of multiples. Valuations are in the neighbourhood where he would not be buying.

Execution over the past few years has been fantastic. Good management. Trades at a discount to its peers because of its smaller size and lower multiple earnings. They’ve fixed that and the stock has appreciated quite strongly. They also have the Sky Jack industrial division, which is leveraged to construction as well. He likes the name. However, the stock has caught up to the sector average now, so going forward they have to continue to grow their earnings like they have been. He likes the name.

It is not in play, but they came down when another company in the space was bought. It was unwarranted. They now have Linamar transportation.

If he owned, he would be switching to Magna (MG-T), but he likes this and Martinrea (MRE-T) along with Magna. They are all good companies and leaders in what they do. He has a very positive outlook on the auto sector.

(A Top Pick Aug 8/8/13. Up 90.32%.) Auto production rate in the US was 17.5 million, best quarter since 2005. Still sees an opportunity for Europe to get turned around.

Like this company because they have been beating their quarters. They supply parts for power trains. Every car manufacturer has to be upgraded in power trains because of all the mandated fuel efficiency requirements. This is huge in Europe and the US and will obviously be huge in Asia as well. Also, has the Skyjack division, which works well for the late cycle as it is in the industrial sector. Yield of 0.63%.

He would be a little concerned here. The stock has had a fantastic run. You have to buy early in the auto cycle. Have done well on the earnings side and have beaten in the last number of quarters. Valuation is higher than the rest of the group.

Prefers Magna (MG-T) which is bigger and slightly better positioned and more liquid. This is a really good company.

Although auto sales can stay flat at 15-16 million for 10 years, auto-parts suppliers are seeing their businesses grow because the big 3, every year, are outsourcing more of their production. This is definitely a Hold but if there is a dip, then you can buy it.

Always admired how well this company is run. Popped today when earnings came out and margins were way above normal. This is because they are going into products that take a lot more capital expenditures to build so they have to build in a lot more margins to make it up over the lifecycle of the projects. Going forward he expects they will do more of that. Transforming itself from a low margin company to a medium margin company.

Doesn’t know that she would be selling any of the auto parts names. This one had really quite attractive last two quarters, unlike the year before. Have a very healthy looking backlog. Not widely expensive. You want to Sell at the peak of the cycle, but she thinks we are in the middle of it now. We have another couple of years.

The #2 Canadian auto-parts manufacturer. If you own, he would recommend you take half your profits because it is up by 100% since mid-2012. This is a leveraged play on the auto cyclical recovery and has done very well. Very well run and have made lots of accretive acquisitions. Record sales at $3.6 billion and a $2.8 billion order book.

Market leader in autoparts. Trend is up. He wouldn't doubt that it will pull back, but that will probably be short term. Technically it looks great.

These companies have done extremely well. The whole auto parts area has done well. He is concerned about markets being overvalued so you have to be sure on stock selection. The stock is well above its 200 day moving average. Stocks don’t want to get that far above the average. Put a stop on it.