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

You have to consider what the auto cycle look like. There has been a strong run-up in auto sales in the last 2-3 years, and people are thinking that is going to come down. That may be true, but this company is more of an international company, so if auto sales are 1%-3%, this company should do a little better because they supply other parts of it. This is not expensive, trading at about 7X earnings and 4.7X EV to EBITDA, and it has a decent yield. You are going to have to wait it out a little longer to see a stabilization in the auto cycle. This company has the ability to grow, not only through acquisition, but they can grow in Asia as well.

Linamar (LNR-T) or Magna (MG-T)? Both are great names. This one is more of a pure play in what he is trying to look for in the auto parts area. It is having a difficult time getting off the ground with a lot of doubts about Europe and what is going on with currencies. He would like to get back into this. If you believe the global economy is picking up, and you want to have a great global name that you can buy with the Cdn$, this is certainly one of the top class name he would be looking at.

(A Top Pick Feb 23/17. Down 4.3%.) An example of a company that typically does well from February into the end of April. This hit the seasonal period, but the car companies just didn’t do that well.

Not expensive at 7X earnings, and has a decent dividend yield. The car industry kind of collapsed in 2008-2009 and then it took off. The number of cars sold is off the charts in the last several years. There is a feeling that this volume cannot continue. Magna is a parts producer so they deal with everybody. Even though the car industry may grow at 1%, Magna could probably grow at between 3% and 5%. You should see better margin improvements. The car industry will probably have most of its growth in emerging markets over the next several years, and they are moving into that area. They have a pristine balance sheet, so they could look for some acquisitions. Dividend yield of 2.8%.

This seems to be staying in the $50-$60 range. Last earnings were a little disappointing in terms of margins having come down a little. There are probably some worries on their exposure to the euro zone. There is talk about peak auto and how that might impact their business, but not sure he subscribes to that. He would look at this at around $50. There is a technical barrier there, and if it bounces then a little bit of profit. If it breaks down though that, it might continue to go down. There are better places for cyclical money.

He was looking at this at around the $56-$61 level. It has some weakness to work through. It will probably get to a couple of the low touch points of around $50. He would not touch this right now. All the values he looks at are weakening.

This has been a little flat. The 200-day moving average has been slowly evolving upward. It has dropped because of uncertainty about the Trump administration and what happens with the possible border tax. There is also the question about how auto sales are going. However, it is trading at a very cheap valuation at 7X forward earnings, and is growing at about 9%. They are trying to get to all the different spaces in the car in terms of providing auto parts. Even though auto sales might be coming down, they are grabbing more market share within the cars and trucks.

(A Top Pick Aug 29/16. Up 3%.) Feels people are reacting too much to peak auto sales. This sold off 4%-6% this week alone, just on weak sales numbers for the month of March, but one month doesn’t really make a trend. More importantly, the US is not the only auto market in the world. This company is selling in Europe and in Asia. They are also increasing content per vehicle.

He would not buy it at these levels. It has nothing to do with quality or valuation. It is because the levels of auto production are quite elevated. What if the economy slows? He is not involved in auto parts now because he bought it when it was out of favour. Most of the auto demand is behind us.

(Top Pick Mar 31/16, Up 5%) He bought because he thought the economy would improve but now you have border tax pressures. This is now more than reflected in the share price. He still sees EPS growth. It has a good balance sheet. It can go higher when we get through the border tax concerns.

(A Top Pick March 1/16. Up 14%.) This has gone through some tough times. Auto sales had a huge recovery from the bottom of 2008. Sales are pretty much at an all-time high, both in the US and globally. They’ve also had some issues from foreign currency translation, mostly because the US$ went up. He still likes the company and management. No longer in the stock, but there will be a time to buy this again.

This has Mexican operations, which is a big kicker regarding the Trump administration. The good thing about them is that they are getting more parts to the car per vehicle, which is why they have been getting the growth. He would have no problem owning this.

Until the US decides what it is going to do with its cross-border tax, a company like this is right in their crosshairs because it is European. Until the situation is a lot clearer, you should stay away from this. A great company, but they are going to have to possibly contend with new rules.

This is going to make a lot of money whether 18 or 17 million cars are sold, because they are generating so much free cash flow. They are buying back stock, making acquisitions, raising dividends, and they have pricing power. There is no question that the big growth is over, but it was only the come-back from 2009. This is not priced to perfection, trading at only 7X earnings. They have a lot of opportunity as the world goes more electric and autonomous cars. A good interesting hold here.

Wait a couple of days and see if you can get a better entry point. It was just rated a strong buy by an investment firm. He does not know what this one will look like after the trade negotiations are done.