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

There is a fear that this manic pace of auto sales in the US can’t continue. There are also fears from the Donald Trump perspective too. They have some Mexican plants, and that could be impacted. It really depends upon what the Trump administration eventually does. A well-managed company and is going to do well longer-term. If you own, he would continue to Hold, and if there was more of a pullback here, he would definitely be a buyer.

Just reported and disappointed overall as was expected. The disappointment came from their European operations, not from North America. A great company and trading at a discount relative to its historical average. A pretty good place to put your money to work if you can withstand some of the political uncertainties surrounding what Donald Trump is trying to do. For the typical vehicle, auto parts pass the border back and forth more than 10 times. A very complex industry to change. He wouldn’t bet against this company. This represents a buying opportunity.

It is a classic play on the economy. Consumers keep buying cars. Feb. 24 to Apr. 24 is the period of seasonal strength. We are seeing a break out taking place. Technically and seasonally it looks good. (Analysts’ target; $65.37).

The biggest auto parts manufacturer in Canada, and the 2^nd globally. One of the most underappreciated Canadian success stories. He continues to be defied by the valuation in this market where we have Shopify (SHOP-T) trading at 100X 3-4 years out earnings, and you can buy this one at 7X next year’s earnings with a dividend that increases every year and they buy back stock. Dividend yield of 2.25%. (Analysts’ price target is $65.37.)

(Market Call Minute) Trump cannot disrupt the supply lines in the auto industry. Plants in Canada, US, and Mexico. It is safe and cheap.

(A Top Pick Aug 29/16. Up 13.13%.) Canada’s largest auto parts producer. It has a platform that is well balanced between producing in Canada, US, Europe and Asia. It is outgrowing the industry in all of those regions, primarily on the back of product innovation. They have been doing buybacks at a stepped-up pace. Trading at about 7.8X its earnings, versus its peer group that is running at 11X.

A great play on the auto cycle. 18 million cars a year are being produced, and perhaps accelerating in Europe and continuing at high levels in Asia. The company is very innovative and are making advances in vehicle light weighting, transmissions and advanced driver systems. Trading at a discounted valuation. Dividend yield of 2.28%. (Analysts’ price target is $65.48.)

He doesn’t own anything in the auto area, but is an area he is looking at. Globally auto stocks are starting to act better. Europe has been a very poor auto market for a long time, but is starting to pick up. Also, things are picking up in developing markets as well. Believes the US economy will be doing a lot better than a lot of economists have predicted. That will be good for consumer confidence, jobs will be good, consumer confidence will pick up, and that will be good for auto sales. This company should do okay and is one that he is looking at. Dividend yield of 2.3%.

He watches this one closely. They have done nothing with increasing auto sales. Canada is suffering because of what Trump might do with all the plants. He is looking at it closely.

The number of aging cars on the road continues to surprise most analysts. He thinks there is going to be a steady replacement cycle. Doesn’t think we are going to see peak autos. The US/Mexico issue is going to be noise, and certainly a bit of a headwind for a while. It probably means you won’t see the multiples you traditionally expect for company like this. Wait until some of the headline news blows over before doing anything.

(A Top Pick Jan 22/16. Up 17.23%.) This has over 300 plants globally. They are investing a lot of money into their Magna Steyr operations in Austria. The CapX is going to go up this year, but it will decline next year. Good dividend growth and good free cash flow.

If there is a bigger electrification of cars, this will benefit far more than other auto parts suppliers. Also, it is a much more diversified global business. People are really expecting the car industry to not have the growth it has had over the last 3-4 years. Not expensive and pays a nice dividend.

Trading at about 8.5X earnings, so it is still pretty cheap. We now have the wildcard, Trump, and how much protectionism will he want to implement against the auto industry. He is going to have to watch this space.

(A Top Pick Aug 29/16. Up 14.93%.) Very much on trend to where investors are reallocating funds in the 4^th quarter in the wake of signals given from the election. Canada’s largest auto parts supplier. A prolific cash flow generator with a decent dividend yield. Expects they are going to be buying back stock, which is a new phenomenon for them.

A year and a half of price weakness and then post-election it has done well along with some other car companies. You are smack dab in the middle of the trading range. He does not see a rosy outlook here and sees more downside risk than upside.