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

A lot of people are really optimistic about the auto cycle and this is a big player. Trading at a pretty reasonable valuation. Stocks that have had big moves like this one are going to be susceptible to profit taking, particularly when you get closer to the end of the year. He avoids the car industry because it is usually capital intensive and highly cyclical. You want to Buy when you are afraid they are going to go broke and Sell when they are selling 16 million cars a year as they are doing now.

This is such a cyclical area that you need to get in early and get out early. If anything, he would be exiting companies like this and looking for cheaper value.

If you want diversified auto exposure, this is a great pick. 1.5% dividend yield.

Owns no auto stocks at the moment. Is looking at Magna. They have a great exposure in Europe. It is one way to play a recovery in Europe. He likes the auto industry. $78 would be a good entry point.

Likes the auto sector. Traded between 9X earnings and 10X for years and everyone forgot that auto-parts companies are growth companies. This is probably one of the premier auto-parts companies in the world. Believes it is going to grow at a faster rate than the OEMs. The OEM growth rate is probably a lot higher than it has been in past years because of the under consumption of autos and their natural replacement cycle.

Which auto-parts maker would you put your money on and why? His choice would be Magna (MG-T) although the stock has done extremely well. Latest results show the European margins better than had been anticipated so their restructuring efforts are obviously starting to pay dividends. There is still very good leverage. The margin was something like 3.2% and their longer-term goal is to get it to 4%-5% over the next 2-3 years. That would offer a lot of leverage on earnings. Good upside on a 2-three-year basis. Target shorter term is $90.

A great way to participate in the auto cycle. They have content across the major brands and across the globe. They have no debt and about a 6% cash flow yield. Europe is getting a little bit better. Trading at 13X earnings so it is not expensive.

Thinks this definitely gets to $90. This is cyclical, so you don’t get a really high multiple. It is around 11X earnings. He expects that he will be out of this. 2 years from now. Sometime between then and now, it will get peaky and get ahead of itself. Great holding because you are not tied to any one carmaker.

Thinks it still has legs, because the auto industry is still growing. As long as we are making more cars, it should be okay. We are in the replacement cycle right now because of the pent-up demand. Thinks there is probably another couple of years of auto growth.

(A Top Pick May 2/13. Up 38.95%.) Earnings expectations are going up and the stock is still cheap. Trading at 10X earnings with a 1.6% dividend yield and a phenomenal balance sheet. Thinks the stock will be over $100 in the next year. Still a Buy.

(Market Call Minute.) Very great company. Good in China and Europe and marvellous in the US. It will get better. Doesn’t see anything going wrong.

(Market Call Minute) Switched into Ford. Had owned MG. You could buy it here.

This one definitely has a future. We are at that sweet spot right now where auto sales in North America are growing. Europe is starting to catch on too. These companies have gone parabolic in the last 6 months and are probably due for a pullback. If you own, it is always safe to take a little bit of money off the table. The long term story is still in play.

He thinks the car sector will slow down a little and will impact Magna but he has been wrong in the past. He might just trail up his stop loss on this one.

Had a great run, and for all the right reasons. Auto sales are up and the average age of cars in the US is at a high so continued success will be there for this company.