Opinions
Don Vialoux
Magna Int'l. (A)
MG-T
HOLD
May 29, 2015
Stock price when the opinion was issued
You might be interested:
It won't pull back much from here. Given tariffs, this space is uncertain, but eventually we will settle this tariff war. Auto manufacturing is so emeshed between both countries that it would take a very long time to rejig it. This or Linamar are fine, but Magna pays a higher PE, though trades at a higher price-to-book. Your horizon must be long to own this, like 3-4 years.
Very hesitant. Recent recovery has been sharp and quick, almost as though it's factoring in abolition of tariffs completely. We need more clarity on tariffs. Auto industry is highly cyclical and depends on health of the economy, and we're seeing signs of weakening.
If you own it, don't need the cash, and have a 5-10 year time horizon, you should be fine. But there could be further weakness from here.
Longer-term charts indicate this is still going higher. Typically people buy cars in the spring, so the auto sector does really well at that time of year until the beginning of May. After that seasonality tends to slow down. This stock is clearly in an upward trend and just broke through a new all-time high. It is outperforming the TSE composite and is well above its 20 day moving average. Technically you are in gear. You want to continue holding this as long as the technicals remain positive.