Opinions
David Baskin
Magna Int'l. (A)
MG-T
PAST TOP PICK
Jun 12, 2018
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.
(A Top Pick May 17, 2017. Up 45%). Magna is invested across many different manufacturing platforms. They are no longer just in auto parts. They do complete vehicle assembly and have a foothold in autonomous vehicles and AI. They have an integrated factory platform across North America with almost equal numbers of plants in Canada, the United States and Mexico. He thinks they are trading at a modest price to earnings ratio, like all other auto companies. They just aren't getting enough respect.