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

Concordia Health (CXR-T) or Magna (MG-T)? He prefers Magna. In a world of uncertainty, it tends to be a little more stable. It gives you exposure to the auto sector, without having to take the risk of choosing an auto manufacturer. There has been a recent pullback in this, which he likes as an entry point. Also, with the commodity downturn there have been growing margins, especially because of their input costs going down. Pays a good dividend.

If you believe that in the next 2-3 years this company is going to be selling more auto parts and generating more free cash flow, then he would be sticking with this. They gave a very nice outlook for 2016 as well as 2018. Have made smart moves getting into Asia, and may have a new renaissance with self driving cars, new types of cars, new car competition, etc.

An auto parts company, but is trading at about 7X next year’s earnings. Pristine balance sheet. Made an acquisition of Getrag in Germany which is very big in transmissions. Cars have to become more fuel efficient, and Getrag can do that. Cars have to be lighter, and Magna can capitalize on all these trends in the car industry. Only 5% of their sales are in China, but will grow over time. Dividend yield of 2.33%.

There is industrywide concern that we could be at peak auto sales. In Q3 they guided lower on their Asian margins. Also, had 3 North American plants with operational difficulties. They report in US$s, so the Canadian and US operations are dragging them down. The good stuff is that the came out last week and boosted their sales outlook by 12%-15% for the next 3 years. They believe their margins are going to expand in all their geographies. Combined with some buybacks, he sees about 16% per share growth over the next couple of years. Cheap relative to the group. If we are in a correction in a bull market, this is a name you buy.

There are record car sales in the US with pretty good car sales in Europe as well and the stock has done very well. It has just started coming off with the market. Maybe the best is behind these kinds of stocks.

The whole auto parts sector is having difficulty right now. There are people who are questioning the sector, but he thinks the consumer is in pretty good shape. This company sells a lot of stuff into Europe, and by nature into Germany. Some of the German car companies are under a little pressure right now. He would like to this turn around before he put money to work. Would also like the sector to get a bit of steam.

He owned it earlier in the cycle. The concern is where you peak. At 18 million units in the US in a year is about as good as it is going to get. They announced a nice deal with BMW last week. It is more of an industry call. He thinks markets will struggle right now as we decide if we are going into global recession.

Now trading at about 8X earnings. Their recent European acquisition looks really good, accretive to earnings on the transmission components side. Very well-run company with a really, really strong balance sheet. They have a nice market share and do have longer-term “model year contracts”. Things might be difficult if the market is bad or the economy goes into a small recession, but with 5-6 year “model year contracts” and a great balance sheet, it is not going to be a big problem long-term. A pretty good investment opportunity right now.

You would think that given the buoyant auto sales and this company’s global reach, this would be a good time for the company. It hasn’t turned out that way. He keeps looking at this. On a macro call it should be good with Europe coming back. It is certainly a quality company, and if car sales are going to continue, this is a good one to keep a watch on.

Thinks they give their guidance next week, so wait before doing anything. OEMs were down about 7% last year, and is now even worse. Seeing a little bit of a top in auto parts. Valuations are still okay, but not as cheap as they have been. You want to get out in front of the auto sales, which is what is happening right now. All the stocks have broken through their 200-50 day moving averages, signalling there is something else going on.

You would think that with growth in the sector and the aged cars in North America, you would be okay. They hit a 52 week low this morning. He sold recently and switched to MRE-T. He would hold if you still own MG-T.

Don’t sell in here, although don’t add to it. It is still a cheap stock and they are still getting better penetration. They are positioned as well as anyone in North America or Europe.

Seems to be suffering from the whole industrial malaise that is hitting lots of stock. Had a downdraft after their quarter came out which is very telling. When they released their 3^rd quarter earnings, they basically set the bar lower. To get to where analysts had previously expected the auto sector, it was a pretty big stretch. A lot of positive things needed to happen. Auto stocks have not done well. Thinks it is just general fear of an industrial slowdown coming out of the fear of a general economic slowdown. If you are going to play a recovery, there are better places to go.

The whole auto sector has not been performing well. This has a big European operation with its big customer being Volkswagen. As a long-term investor, it is a fabulous company, run really, really well.

Thinks auto stocks will be okay with the interest rate impact. This is a well positioned company. As long as the cycle doesn’t get really bad, this should be a pretty good investment.