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

This has had a huge recovery and has done a very good job. He would Hold, but wouldn’t Buy. There are some question marks with BREXIT and demand from the various factories in Europe. There is a little uncertainty.

A great company, but there is a very big difference between a great company and a great stock. Admires their margins and the returns. The problem is, they are an auto parts company, which kind of topped out versus the market in the 4^th quarter of 2013.

Magna (MG-T) or Linamar (LNR-T)? He likes the auto parts space. Just bought this one for the very first time about 6 months ago, and then doubled his position on June 28. This is his favourite name, but Linamar makes a fantastic runner-up.

He would like this someday, but he would wait. Feels the auto cycle has peaked for now in North America. However, Europe is just starting to get ready to move.

(A Top Pick Sept 21/15. Down 17.18%.) His pick in the auto parts area. The 2^nd largest parts Company globally. Really well strategically positioned. Good balance sheet. A good track record of building organically as well as through acquisitions. Trading at 6X next year’s earnings. 2.5% dividend yield. Still a Buy.

It is really the sub-prime housing of the US. We have pulled so much demand forward. This is cyclical. His model price is $88. This stock has a long way to fall in the event of a correction.

Canada’s largest auto parts company. This is a non-resource cyclical. It is taking market share in North America, Europe and Asia. Margins are improving. Very inexpensive at about 7X earnings, versus its peers at about 11X. Dividend yield of 2.46%.

This has shown up on his screens as cheap valuations, trading at 7 or 8 times forward PE. What is worrying is that he thinks it is facing some moderating US and global auto sales. They are trying to increase the content in the auto parts they provide, as well as going into the higher margin technology parts. On the one hand you have the problem of slowing growth, but on the other hand it is a pretty cheap stock. He would watch to see where it lands and where it is moving. He would want to confirm that it is above the 200 day moving average, and use a stop loss.

There has been a pullback in a number of auto related stocks. Production in the most recent quarter was down. This is the biggest and most exposed of the auto parts companies. The question most people are asking is about peak auto. This company is really well positioned in the industry, and has a good balance sheet. Trading at around 4 or 5 times cash flow and about the same on earnings. A good time to be looking at this.

He has been buying Linamar (LNR-T) in the last 2 months. The valuation of these stocks got so depressed on peak auto, global recession fears, Tesla, etc. They continually beat expectations, grow margins and show that they can keep up with demand and grow their content per vehicle.

A phenomenal Canadian success story. A lot of people feel we are at the top of the auto cycle and that we have nowhere to go but down, especially in the US. If you feel the US market is not peaking and that it should stabilize, this is a good Buy. Pays a decent dividend. Sold his holdings because he felt this was near the top and that the global bull market in autos was plateauing. Until he sees more evidence that the auto cycle is trending back up, it is hard to see these things move a lot.

The sector has rolled down a bit generally, so you are going through a short-term cycling down, but this is one of Canada’s greatest companies. It is global including China and Europe. You could buy this for the long-term.

Great auto parts company around the world. A table pounding buy.

One of the best managed automotive companies in the world. It’s diversified, being in North America and Europe. The basic attitude of the market towards the automotive stocks has turned very negative. He would be a little cautious about stepping in now, but at some point, maybe $10 below where it is now, you could have a hard look at it. This trades at a little less than 8X earnings.

He thought their guidance was pretty good. People think the US auto cycle has peaked. He disagrees. He thinks so few cars were sold after 2008 that there is still a lot of replacement to go. These are a bunch of pretty smart guys with a solid position in the industry. He prefers this one to others.