Magna Int'l. (A) (MG.TO)

One of Canada’s biggest industrial companies. Relatively cheap at 11 or 12 times earnings, a 30% discount to the market. They are positioned to participate in both driverless and electric vehicles, and will get that share of the business. He is not overly concerned about the affect of NAFTA on this company.

Recently sold this at around $70. This is mainly over a few concerns. Is the auto cycle starting to peak and decelerate a little? Secondly, where are the NAFTA talks going to go? Still a pretty cheap name from a fundamental standpoint, trading at about 9X Forward Earnings, but from a risk perspective, he would rather own other names.

A great, well-managed company with low debt. Pays a decent dividend and has increased it over time. At 8X forward earnings, it’s not cheap enough for him. Whether cars are gasoline or electric, they will still be there.

This is back to where it was about 2 years ago. The company has quite a bit of exposure to Europe, which is very encouraging. That is where a lot of gains are coming from. Unfortunately, the NAFTA negotiations are still a big question mark. It’s a name he is reluctant to own. Every time he has looked at it, he has thought it a bit overvalued.

(Market Call Minute) He likes it. It has a good global footprint. High ROE and a good capital return to shareholder strategy. If it has become outsized in your portfolio, don’t be shy about taking profits.

Doesn’t own any auto stocks, but if he were going to own one, it would be this. Very well run and the market leader. Auto sales in the US have plateaued for now, but have plateaued at a high rate. European auto sales are growing. The NAFTA worries are overhanging the prices of Canadian autos, but if you are an investor, it’s a decent buy here.

In consumer and consumer cyclicals, he’s been focused on travel and leisure and home construction. The auto sector has come around over the last few months. Within the auto sector, this is really attractive. They are going from about $2 billion in revenue from assembling full cars, to probably $7 billion by 2019, a 45% growth. About 35% of business comes from Europe. Generates a lot of free cash and has very good dividend growth. The stock is technically strong.

(A Top Pick Feb 21/17. Up 16%.) This is going to pay off more in the coming year. Earnings are going up and it has a great balance sheet. Trading at 8X next year’s earnings and 5X EV to EBITDA. It’s the 2^nd biggest auto parts company globally and is really well positioned. Pays a small 2% yield that increases every year.

(A Top Pick Jan 6/17. Up 15%.) They’ve said that regardless of whether it is internal combustion or an electric motor, they will quite happily end up doing well. Thinks it still has a bright future.

Has done a good job of adapting to all the peak auto concerns and autonomous cars. There is still going to be a demand for cars regardless, and this company can supply the parts. The balance sheet remains strong. They are buying back shares as well as having a dividend. Still a pretty cheap company. The premier manufacturing company.

Had very good earnings. Everybody was talking about the NA car market peaking out, which he thought it did in 2015, but not very fast. The company is threatened by changes in NAFTA. They have plants equally in Canada, Mexico and the US, roughly 17 plants in each country. Has a fully integrated supply network across those 2 borders. If NAFTA talks fail, no one knows what is going to happen. Readjusting to a NAFTA-less world would be difficult for the entire auto industry. They are well positioned for any changes in the auto industry.

He does not follow it specially but has owned a number of related companies. MG-T is probably Canada’s best known Auto parts supplier. He thinks it will be as strong if interest rates stay as low as they have been. They are highly leveraged to strength in the stock market.

He is still modelling growth at 12% compounded annually over the next couple of years. A solid balance sheet, so there is still some M&A potential. In Q2, they upped their sales and the free cash flow forecast. Q3 is going to be strong again. The Canadian manufacturers are still a lot cheaper than the US. Trading at around 8X versus its peers at around 8.3X. There is some uncertainty with NAFTA.

(A Top Pick June 22/16. Up 46%.) This was a valuation play, as last year many thought that everyone was going to stop driving. It is no longer undervalued. Pays a reasonable dividend, and is still not expensive, so he is still buying it.

Remember that a chart just shows you what other people have done, and gives you a clue as to what other people are thinking. This was in an uptrend and then fell out of favour. Chart shows that starting in 2016, it has been in an upward channel. In 2015, this paused out around $73-$74. You have to remember that people bought there and will want to get their money back, so there is going to be some selling pressure. It has to get through those sellers to go on to new heights. He would continue to own it, but be cautious around that old high level.