Linamar Corp (LNR.TO)

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.

Auto Parts. He likes the auto industry because of the aging fleet. Auto companies have to become more efficient to compete against the likes of Tesla. LNR-T is big in drive trains and transmissions and are leaders in new technology so they win more content in more cars. Also, the auto market is recovering. A good company in a good sector.

Magna (MG-T) or Linamar (LNR-T)? Both of these are good, but for different reasons. North American global auto production is still recovering from 2008. Other regions, like China, continue to grow. As long as the auto cycle continues to grow, and he thinks they’ll be good for the next couple of years, you’ll continue to see the auto parts suppliers do well. Between these 2, this is a little smaller but has executed superbly in the last couple of years with their expansion plan. Has a little bit higher leverage, but also have industrial exposure to construction.

Great one, below the Magna giant size. LNR is run by a great lady. An amazing boom in cars.

Auto Parts. Will Linamar be better than Magna in 2014? LNR is leading the way in breaking out in price to book value. From a historical point of view there is lots of precedence for it to go higher. There is some question as to whether Magna will follow suit, but he would not be surprised.

Chart shows the stock is clearly in an upward trend and is outperforming the market. Also, it is above its 20 day moving average. This is a winner. Stick with it. Historically, this one usually does very well from around March of each year until June, which is when people are buying cars.

Seasonal strength for this is from March into May but the chart shows it has had a tremendous breakout. Right now it is overbought and he would suggest pursuing it more into the 1^st quarter. Let it come back and retest that broken resistance. Broken resistance should now be support. There is plenty of room to take advantage here.

Chart shows a big gap at around $37. If it came back below that, it may spend some time between $35 and $37, which might be a good way to play this. On the other hand, if you own, you might want to take a little bit off the table.

Prefers this over either Martinrea (MRE-T) or Magna (MG-T) His order of preference on auto-parts companies would be this one 1^st, followed by Martinrea and finally Magna in 3^rd place because it has had such a great run. $39 in 12 months is very reasonable

Linamar (LNR-T) or Magna (MG-T)? All of the auto-parts companies have done really, really well. Multiples still, look cheap because there is a lot of growth but you have to be careful of that because it might be peak earnings here. Both have beautiful charts. Thinks this one trades at a little bit lower multiple. There is more liquidity with Magna which has quite a bit of European exposure.

Likes the sector. They are good at executing. There may be more room to run than Magna. The shares have some upside here.

(A Top Pick Oct 1/12. Up up 58.55%.) Still a Buy. It is getting more of each car model that is coming out. This is a play on emerging markets as well as North America.

Pent up demand in autos. Average car is 11 years old. Big beneficiary of a lower Canadian Dollar. 80% of sales into the US. Very good upside to the earnings. This is a valuation play.

Done very well owning names in the auto industry. He likes this story. Continues to deliver on cash flow and earnings. Spent a lot of money over the last couple of years and now they will continue to do well. Average auto in N.A is 11 years old. One of the better players in the industry. His top pick trades at a lower multiple. Maybe take some money off the table unless you just got in.

(Market Call Minute) Big shareholder in Magna and looking hard at LNR right now. MG is the leader and now he wants to add more from the group.