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

(A Top Pick July 7/15. Down 26.47%.) This is something he would absolutely not sell. It is perennially undervalued, and has come off on a price momentum basis, but the value is still in the top 3% of all stocks in Canada. Great balance sheet. PE of around 8 or 9 times. 2.5% dividend yield.

(Market Call Minute.) Auto companies have had a great cycle, and seem to be fairly firm in here. They all seem to be increasing their geographic presence. This is a company that has been extremely well-managed in recent years, and is the largest of the bunch. He would be wondering how much better can things get in the auto cycle.

They are dependent on sentiment around the auto cycle, which some think is running out of gas. He thinks it is a mid-cycle slow down. He thinks recession is unlikely and that Europe will pick up.

Reasonably cheap. The multiples are in the mid-single digits on EBITDA. Even the PE is quite low. The concern is US car sales, which have been very strong in the past few years, but now toppy and looking like they have reached the maximum and the recovery is over. There is concern they will roll over. It could be interesting because they have a couple of new programs with car manufacturers that are coming online in the next few quarters. That could drive revenue growth on top of the natural growth. From that perspective, this could be interesting to own.

The whole group has underperformed the market because of overhang on US auto production. This one has had a couple of issues, including the diesel problem with Volkswagen, and they are still in the process of correcting that. Also, had some operational issues in November at 3 of their North American plants. Those operational issues will be resolved. This is on her watch list. Dividend yield of 2.5%.

He likes the auto business. It has bounced back and they are running at about 17 million units a year, which will be helpful to this company. Doesn’t see anything that is going to take down the automobile business badly, because of the age of the cars on the road.

(A Top Pick June 29/15. Down 23.69%.) He is worried about peak auto sales and their growth in China. Have over 300 facilities, and have had issues, but only on 3 or 4.

Non-performing loans in the US are increasing rapidly. You are probably seeing a mini bubble in the auto sector and that car sales will go down over the next couple of years. Buy in the mid-$40s.

There is talk of an Apple car. They have some kind of agreement with Apple.

The numbers in the car industry look good. There is more pent-up demand. Car builders have had a very good run for the last couple of years, but the experts seem to think there is room for that to continue. That would imply that this company should be okay.

The auto cycle slowdown, and the perception that this company does a lot in Europe, is what has contributed to the decline that started last August. The stock went from $72 down to $44, a very significant decline. His first Cdn$ purchase in the new year was this company. They got rid of their dual class structure in 2010, and ever since then it has traded at a modest discount to its peers. An incredibly well run business. Have a very strong balance sheet and lots of opportunity with lots of agreements ahead of them.

Has fallen quite a bit. You have to really think about the economic outlook and what rate people are buying cars at. It depends on what you think of the US economy. It could rebound from here and be quite cheap here. He thinks people are showing fears here, but the company has grown earnings over time.

(Top Pick Apr 16/15, Down 15.64%) It is unfortunate the share price has not performed. They benefit regardless of which auto manufacturer does well. There is a cooling of interest in this space. This is 9 times earnings and is cheap, but all in this space trade at a discount to the market.

Number 2 auto parts company globally. A beneficiary of the globalization of the auto industry. They are buying back stock and have a 6% free cash flow yield. Cheap at 7X 2017 earnings. Dividend yield of 2.41%.

There is nothing wrong with this here. On any weakness, you would use it as an entry point. On the other hand, you can buy some of it now and add more on any weakness. He likes the sector and thinks it’s been beaten up, and is expecting it to do better.