Opinions
Greg Newman
Magna Int'l. (A)
MG-T
TOP PICK
Dec 09, 2016
Stock price when the opinion was issued
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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.
An economically sensitive name, and he thinks this is the right environment for that. Up until very recently, the whole group was trading at 20 year lows, at levels that would indicate we were coming into a recession, and he doesn’t think we are. Still very cheap relative to its peers. It has good growth and a buyback. On Q3 they beat in Europe and were in line in North America. Its Getrag acquisition is performing ahead of expectations. Dividend yield of 2.18%. (Analysts’ price target is $64.52.)