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

One of the largest auto parts companies in the world. 3% revenue growth this year. They are relying on margin expansion for growth this year. Linamar is doing better, which he holds. The valuations on both are reasonable.

(A Top Pick Dec 6/13. Up 44.58%.) Continues to like this one. One of the best positioned companies in the industry to continue to grow market share. They do a great job for their OEM customers. They are leaders in developing new stuff in fuel saving technologies. Thinks it is going higher.

Thinks the North American auto cycle is nearing its peak. If you dig down, a lot of it is being financed by private lenders, which is not good because if rates start to move then people buying these cars should not be doing so. This company is over exposed to the 3 North American OEMs, which are slowly losing share. Margins they have in Europe are much lower than in North America.

This company is a huge beneficiary of very impressive auto numbers in the US. Also, they have started to turn around their European business. Very clean balance sheet.

Thinks there is great opportunity for this company. Ranks well in his Quant model. Earnings growth is forecast at 19% this year. 1.3% dividend yield.

A very solid company and very well run. Good management. He would be a little bit cautious because there has been such a big ramp up in North American auto sales. This could be getting priced to perfection to some degree. However, the stock has consolidated here for a while, so if those numbers ramp from up from an earnings perspective, the stock is probably ready for another move. Right now he prefers Linamar (LNR-T).

We have been on a really good rebound in the automotive industry over the last few years. The shares have generally reflected this, but given his current concerns about the ability of these markets to continue, he is not sure that the automotive market will remain as strong as it has been.

He is not a big fan of the corporate governance of this company. Also, auto parts business is very cyclical. They have a great market share with a number of auto manufacturers, but traditionally this has been a lower margin, cyclical business. Not one he is interested in.

One of his favourite stocks over the last 5 years. Closed yesterday at $122.60. He has a model price of $148.05, a 20% upside. Still think you will make money in the future, but just not as much as you have in the past.

Prefers Ford (F-N) because of the better dividend. There was a time when there was a lot of room for the suppliers to gain ground because they were very, very efficient. However, a company like Ford has had to become very efficient on its own. Feels there is good value in Magna. 1.4% dividend yield.

Has been extremely surprised at how well it’s done. They have relationships with every single car manufacturer. Balance sheet is in great shape. He is looking to pare some profits, but thinks car sales are going to be very strong for the next 2 to 3 years, so not ready to get out of the name just yet.

Nobody wants to buy this at its high price, but it is cheaper than its peers. 6.2% times 2015 estimates versus the peers at around 6.5%. Given the quality of this name, their higher return on assets, buybacks, dividend growth and acquisition opportunities, they should trade higher at 6.75%. US price is about $110, and he sees it going to $150 US. Raised their guidance on sales and margins in Q1, and he sees upside for both North American and European margins. He estimates they can grow their dividend at 31% in 2015 as well as a 16.5% buyback.

(Top Pick Jul 15/13, Up 53.80%) Model price is $142, a 23% upside. Still trading at a discount to model price and still looks good.

His major concern and consideration their exposure to the car industry. Well-run company. Doesn’t think the car industry is going to come to a screeching halt. If you really want exposure to the automotive manufacturing industry, this is a good one.

He sees 2 lines of support. The 1^st line is at $114, which is where you would start to reduce. The 2^nd is at $111, which is where he would recommend Selling. He likes the period of consolidation from March to June. The breakout from that determined the direction, which was up. If it breaks below $111, you don’t see a lot of support until about $95.