Magna International (MGA-N)

Tariffs are impacted them, but the auto parts sector is already out of favour. EV sales have levelled off. Magna lower their guidance again and again last year. They're nearing a bottom now. Prefers Linamar for its much lower EV of 6x, and they have diverse businesses, like agricultural equipment.

Under valued given current stock price. Expecting stronger sales ahead. Auto part sector not favorable right now, but is a good time to buy. Car business presents many customers with aging auto fleet in North America (will require replacement parts). Expecting earnings to rise, especially with EV opportunity. 

Growth has slowed down and profitability has been sliding since 2018. Its valuation of 7X forward earnings reflects a lot of these concerns, and it trades just above book value at 1.1X price to book. Cash flows are mostly used to pay its dividend, and it has been a net issuer of debt over the past two years. We do not like its recent momentum, following a string of weak earnings results. We would prefer to wait until next earnings to assess if a floor can be put into its price, but for now the cheap valuation could become even cheaper if results continue to disappoint. 
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Too early to buy shares in business. Expecting further weakness. Wait for shares to hit rock bottom before buying. Strong brand name with history of strong execution. 

Owns shares, and would recommend buying. Can have strong moves in positive direction due to cyclical nature of business. Would recommend buying around $70. Expecting shares to rise to $100. 

Owns shares in company. Has been buying shares on weakness. Cost containment efforts ahead of schedule. Improving trends in costs. Would recommend buying. Expecting 90% growth rate. Believes company will benefit from soft landing. 

Likes it here. Auto companies will depend more on outsourcing parts, especially with the labour settlements we're seeing. In a good position over the next few years. Tight margins will continue for a little while. Dominant player.

Owns shares in Canadian dividend fund.
Share price appreciating after Covid-19.
Recession fears weighing on share price.
Believes is a good long term investment.
Excellent value at current share price.

Recent bad news tough on stock.
Has owned shares in the past, but not currently.
Very bearish on the auto sector.
Electric vehicle very disruptive on sector (top down government policy).
Wait until sector become better run. 

MG has a decent enough balance sheet, with net debt about 1.6X annual cash flow. 
Dividend payout is in the 25% range and we would not expect a cut. 
Three years is a long forecast time, but analysts show close to $10 in EPS in 2026, so if that is realized the stock is very cheap and is likely to do better. 
But it has had a series of bad announcements, and we would expect the company to be in the penalty box for at least several months now. 
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Current share price presenting good buying opportunity.
Very large shareholders through the years.
Well run company.
Growth into electronics business will be good for the long term.
Auto sector recovering well. 
Car demand growing. 

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. LG joint venture very favorable. Margins improving and strong liquidity. Positioned well for EV growth. Globally diversified operation. Unlock Premium - Try 5i Free