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

They have currency issues. Great company, but they have exposure to Europe and a falling Euro is negative to them from a profitability point of view. If they are at these levels a year from now then they are a buy.

Cars in the US are getting older. With an improving economy and the job market getting better in the US, this is good for auto parts manufacturers. Valuation of 10X forward earnings looks pretty attractive. You are probably getting 15% long-term growth.

Car part companies do well in the spring when people buy new cars. It is struggling right now. The technicals do not support the stock right now. Watch it for a very good seasonal trade by the end of February.

Prefers this over an auto company as they are not reliant on any one brand in particular. Good diversification. Recent selloff was because of a reduction in guidance, but he found it to be very minuscule. There has been a pent up demand in auto sales over the past 5 years, and there has been a bit of talk that it has gotten ahead of itself. With the decline in oil prices, he can see more cars and larger being bought. They are expanding into different regions such as Asia. With this pullback, you could use a half position now.

Good way to avoid having to bet on an auto manufacturer, but to get exposure to the space. Have been growing new plants in Mexico to new plants in India. Recently acquired the remaining piece of Magna E-Car, so they have positioned themselves well to produce parts for the next generation automobile. You are buying it today at quite a low valuation. Historically it has traded anywhere between 7 and 70 times Price to Earnings, and today it is at about 12 times.

Low oil prices should mean we are going to buy a lot more cars. We feel every quarter companies must improve, but this is not the case. He likes the company very much. He does not like to see the stock break the 200 day moving average so it might be time to take some money off the table.

Reported disappointing numbers and revenue numbers were down from where the street expected. If he owned any of these auto parts manufacturers, it would probably be Linamar (LNR-T).

Auto parts stocks have done very well. He likes the name given where we are in the cycle. The average life of a vehicle in North America is about 11 years. We are at a point where the OEMs are focusing more on product design and marketing, and trying to outsource the real heavy lifting to companies like this. This company has a ton of cash on its balance sheet, which helps them in regards to tuck-in acquisitions. Only trading at about 10-11 times earnings. There is further to go with this one.

This has done extremely well lately and was up 40%-45% last year. The environment has been really good. This really ties in with what has been happening in oil/gas. With lower gas prices, it would normally spur demand for automobiles. With the expansion we are seeing in the US economy, this may actually happen. However, this is selling at over 2.5% and almost 3% times BV and 14X earnings and 8X cash flow. You have to see continued growth going out for a while in order to justify those kinds of multiples. Valuations are in the neighbourhood where he would not be buying.

Not an expensive stock with a reasonable dividend yield. The auto sector is forecasting a 3% growth in the car industry and MG-T can surely beat that. They restructured their European business. They did not have a strong footprint in Asia but that will change through organic and acquisition growth. They have a lot of excess cash and can buy back shares and/or raise the dividend. Sometimes you have to trade companies in this sector.

Large operations in Europe and they do have upside because the balance sheet is healthy. They can buy back stock to increase growth.

(A Top Pick Dec 6/13. Up 44.45%.) Has a couple of more years to run. Really well positioned strategically internationally and benefiting from a growing auto business world worldwide. In baseball terminology, this would be in the 4^th-5^th inning for the auto cycle. Europe is still bottoming. They are gaining share globally because they are great manufacturers at low cost and they manage their balance sheet really well.

Getting a little expensive. As it gets up close to EBV +3 he would be more of a seller than a buyer. He has been trimming his holdings as the stock has gone up.

Thinks there are a couple of more years in this auto cycle. Although the numbers are pretty good, he looks at the average age of the cars on the road. It is coming down, but only marginally. It still is about 11 years. Feels the stock still has some growth to it, but don’t stay too long. 2 years would be about right.

Chart shows a pretty nice trend since 2012. There is going to be a little bit of resistance at the previous peak of about $124. He would like to see this break out with a little bit of volume. He would wait until it broke out before getting in.