Opinions John Zechner
MartinreaMRE.TOTOP PICKJul 07, 2015
John ZechnerStock price when the opinion was issued
As of Jun 10, 2026. Market Open.
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Auto stocks are really struggling, both Canada and US, and they're right at the epicentre of this whole tariff battle. Beware the value trap -- something's gone down, looks cheap, but hasn't started going up yet. Chart doesn't look as though it's bottomed out yet.
Though cheap, it could still go lower. Whole sector might take time to build a base, as it's been beaten down so much. The auto sector really brought down the most recent Canadian retail sales numbers.
Everything that could go wrong, has. Potential tariffs of 25%. Concerns about capex needed for EVs. Now trading at 3x operating cashflow, 7-8 forward PE. Doing the right things, great backlog, European exposure. Still likes the story, sticking with it.
John ZechnerThe car sector has disappointed, is floundering. He sold some car stocks, but held onto MRE because it's cheap. Is lots of insider buying and margins are improving. Are almost immune from the EV transition because the components they made can be used in gas as well as electric cars. 8-9x forward PE and a good balance sheet.
John Zechner
A cyclical player, but that happens in the auto industry. He's added to this recently. Still cheap. Autos have issues: inventories are climbing and EVs haven't take off as expected. MRE can supply both EVs and traditional cars, and there's been insider buying. Trades at 3x operating cash flow and 8x forward PE.
John Zechner
True, there are headwinds in autos, but this trades at 3-4x operating cash flow and 8-9x forward PE. Also, they're huge in areas like aluminum parts. Are well-positioned in gas-engine cars and EVs; there's 80% crossover shared between both kinds of cars.
(Analysts’ price target is $19.34)John Zechner;fill-opacity:1;'/%3e%3cpath%20d='M31%2018.6001V30H8V18.6001L14.1334%2022.4334L19.4999%2014L24.8669%2022.4334L31%2018.6001Z'%20fill='%23EE5432'%20style='fill:%23EE5432;fill:color(display-p3%200.9340%200.3310%200.1956);fill-opacity:1;'/%3e%3c/svg%3e){kind=small}
Premium contentOur PAST TOP PICK with MRE has triggered its stop at $12. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 11%, when combined with previous recommendations.
Premium contentFollowing reported earnings indicating revenues increasing 22% over the year, we reiterate MRE as a TOP PICK. Supply chain and semi-conductor supply issues are lessening for the automotive supplier. It trades at 6x earnings and under book value. We like that cash reserves are growing, while debt is retired. We recommend trailing up the stop (from $11) to $12, looking to achieve $19 -- upside potential over 30%. Yield 1.4%
(Analysts’ price target is $19.22)Is really cheap at 8s forward PE and 3x operating cash flow. They delivered this year. Their operating margins are rising. He took some shares off the table at $15, worried about consumer spending and growth. Union impact? Doesn't know about direct impact by unions, but watch for impact of unions on the bigger players, like Ford.
John ZechnerPremium contentWe again reiterate MRE as a TOP PICK. The auto industry supplier last reported record all-time sales and growing cash reserves as it retired debt. It trades at 7x earnings and under book value. Its dividend is backed by a payout ratio under 15% of cash flow. We continue to recommend a stop-loss at $11, looking to achieve $19 -- upside potential of 40%. Yield 1.4%
(Analysts’ price target is $19.38)Premium contentWe reiterate this diversified supplier of automotive motor blocks and transmissions as a TOP PICK. Recently reported earnings showed sales were up over 12% on the year -- setting an all-time record. The company reports shortages of semiconductors is being to ease, which should continue to aid earnings growth. It trades at 6x earnings and under book value. Cash reserves are growing, while debt is retired. We continue to recommend a stop at $11, looking to achieve $19 -- upside potential of 43%. Yield 1.5%
(Analysts’ price target is $19.38)
Even though valuation has moved up a lot in the past year, it is cheaper than the rest of the group in cash flow and earnings. More importantly, they have stuck money into new programs and facilities over the past couple of years and thinks they are just turning round now to the harvesting of those operations. They have a lot of new programs coming into place. You are looking at 10%-15% earnings growth a year at least, over the next 3 years. They are the biggest player on aluminum parts in cars, which is one of the highest areas of growth. Higher European luxury growth. Also, the Cdn$ benefits them. Dividend yield of 0.89%.