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

Canada’s largest auto parts Company. It has been doing well over the last year. The albatross is the threat of NAFTA being torn up. His view is that the rhetoric and posturing is perhaps a bluff. Doesn’t think the fears are going to be born out. This company is taking share and outgrowing the industry in every region they operate in. There are also buying back a lot of stock. He still likes it.

It was downgraded this morning by Morgan Stanley. There is ongoing worry that we have come to the end of auto cycle. He says it looks more like we are settling out to a high level. NAFTA does impact it and you can see the volatility in the stock chart. He thinks more that it is people being nervous about the cycle.

(Top Pick Jan 6/17, Up 1.68%) They will continue to be a great manufacturer even in the light of electric cars. He thinks it is cheap.

It is cheap. He thinks money is not going in because of the potential change caused by TSLA-Q. MG-T reported reasonable numbers. They are an important part of the supply chain, but the supply chain may change.

It is in the cross hairs of the NAFTA renegotiations. It is still cheap and he still likes it. The risk is if US auto sales are peaking. He likes it for the valuation.

All the auto parts stocks have similar valuations, but this one is very slightly cheaper. They are all cheap. They have a fantastic balance sheet and are in the top 20% on price momentum. It has been perpetually undervalued and you may have to wait a while for the world to figure that out.

The concern on all auto stocks is that US auto sales have peaked at about 17 million units, and growth is slow to pick up in Europe. A concern for Canadian manufacturers is that we have NAFTA, which really impacts the trade of auto parts going back and forth. For now, she is waiting on the sidelines. This company is the most global and does have leverage to an increase in content per vehicle in Europe and China.

A lot of the auto part manufacturers are cheap. This is trading at about 7X earnings with a 2.5% dividend yield. By all metrics, it is relatively cheap. The auto industry may grow at 1.5% or so globally, but this company can actually grow faster than that, probably closer to 5%. They have a great balance sheet. Have really expanded into emerging markets which is where the growth is going to come from. You may have to hold this for a fair amount of time.

Is the auto sector coming to an end? Is it over? The decline in 2015-2016 reflected some of those concerns. The multiple got compressed, but earnings kept coming through. He is not a believer that the auto cycle is going to stage an immediate come back. A good company to own in the sense that it is cheap, and did remarkably well in taking costs out of the business. Thinks he can get more torque in an upside move from other sectors.

This has very good exposure to new technologies. The world’s leading manufacturer of smaller vehicle runs. If Google or Apple are to build a car, this will probably be the company they turn to, to actually assemble it for them. Earnings are cheap, making $6.40 US ($8 Cdn). A simple 10 multiple will give you an $80 stock. Dividend yield of 2.4%.

(A Top Pick July 28/16. Up 22.25%.) They have a very good offering to grow even if Peak Auto is the case. He is modelling this as growing 11%. Very healthy balance sheet.

This is a stock that is in the late stage cycle, and generally you don’t own consumer stocks. Industrial products is probably where you want to be. One of the fears is that a lot of car loans are going to go bad in this cycle. Some of the loans go 6-7 years, and by that time, the car is not worth anything. Last quarter, the margins looked a little healthier in Europe. A great company, but it’s just the wrong stage of the cycle.

If you like value, this is your company. Auto and auto parts has recently, in the last 3-4 weeks, made a nice turn. We are starting to get away from all the discussion about peak auto. This company is significantly cheaper than any other large parts producer or subassembly company. They have a great growth engine within the business, being the largest and complete auto assembling outsourced. There was about $2 billion in sales in 2016, which could be $7 billion by 2019. They are just taking over producing half of all the 5 series BMWs globally. Trading at 8X earnings, which is relatively cheap compared to its competitors.

Seasonality is strong from Feb. to May. We had a little bit this year. Technically it has been trading in a range over the last 3 months. There is no indication in which direction it is going. Auto stocks in general have been doing well, but are now showing signs of rolling over so he would be careful here.

(A Top Pick Nov 4/16. Up 18.42%.) The real question becomes do you expect Apple (AAPL-Q) and Google (GOOGL-Q) to end up bending metal like Tesla, or do you expect them to use this company instead. He thinks there is a great opportunity as the current supplier.