Martinrea (MRE.TO)

Historically the auto season does very well in the spring time. He would guess it is probably above its 20 day moving average. Also, the strength relative to the TSE Composite is currently positive. That’s 3 positives. On the other side of that, stocks like this have a history of peaking out at around May of each year. This means we are okay for another month or so, but watch the technicals very closely.

Produces auto parts in Europe, US, South America and soon to be Asia, for many of the auto manufacturers. It has probably been one of the lowest performing of the auto parts companies. New management came in and cleaned things up, taking up from a small-based company to a medium-sized base company. We have a positive auto cycle in North America that will probably last another 4-5 years with sales growing in Europe and probably Asia. Dividend yield of 0.95%.

It is more controversial than MG-T because it is smaller and they had some issues in the past with earnings and the executive. It’s doing well so he would keep it here.

The auto industry in North America has been doing really well and stocks have benefited. This is probably in the 7^th inning. Management has been a concern, and with new management, there is likely going to be an improvement in the way it is run. Very cyclical and not cheap at the moment. If you own consider taking some profits.

His model price is $20, or a 54% upside. It is a cheap way of getting in the space. But auto parts are in the 8^th or 9^th inning.

Has not been a fan of the auto sector lately. The sector is rallying, but this might be the end of the series. Chart shows a price channel with a series of higher lows and higher highs running from 2013 on, so the stock is turning higher. When you have a price channel, you acquire at the lower part of the channel and give up some at the upper part of the channel. If you are a long term investor, you just stay put.

Canadian auto parts company, and is sort of the ugly duckling of the Canadian space. Magna (MG-T) and Linamar (LNR-T) reported very strong results and have had very impressive stock performances over the last couple of years, while this one has been kind of a laggard. There have been some issues with change of management and allegations by the former CEO, but all that seems to have been settled. He is looking at this one right now, and it could be a good opportunity because it trades at a discounted valuation to its peers. 1% dividend yield.

In the consumer discretionary sector and benefiting from the automobile industry uptick in the spring. These tend to do well from the start of the year all the way through to May, when you get a seasonal rise about 75% of the time with an average 20% gain. Chart looks set up to have that move higher again. It broke a down trend line and formed a respectable bottom. The momentum is behind the stock.

It is a combination of value at 10 times earnings, and growth of 15%. Most revenue is in US$ and a good chunk of costs are in CAD$. There is not a parts manufacturer that is as well positioned for the use of aluminum as they are. There is pretty much nothing, but upside even in a sloppy environment.

7 times earnings. It will grow 15-20% a year over the next 3 years. They have a new CEO and a board that is a little smarter than the last one. It is possible this company could get sold.

(A Top Pick Jan 7/14. Up 16.04%.) Stock had gotten hit for non-fundamental reasons, so he bought this at around $8. Has pulled back recently with Magna (MG-T), but also had a miss on one of the quarters. They now have a new, impressive CEO, and thinks there is a good chance of it going back to $13-$14 again.

Not a fan of the sector. He thinks the auto sector has peaked and the cycle is clearly over. This one is driven by news. He wouldn’t own it.

The auto sector has a very strong seasonality with 2 periods of seasonal strength. One is actually coming up pretty soon, from around the end of January, right through until the end of April of each year. Technicals on this stock do not look that good right now. It is currently in a downward trend, so you may want to wait until the period of seasonal strength does arrive. Also, the company has had a controversial time with turmoil on the Board of Directors and a dispute with a former chairman as well.

He is looking for things that are more deep value oriented. This has some growth over the next couple of years, and is trading at a fairly discounted multiple. There has been some disappointment over the management shuffle and infightings over the past years, but in terms of the programs they have put in place and the spending, he can see an earnings growth over the next couple of years of 35%-40%. Also, they have great exposure to aluminum, and using this in cars is a trend going forward. Yield of 1.21%. Can see it 40%-50%-60% higher in a couple of years.

Has had quite a checkered career lately. There has been internal fighting, looks like it is settled and then becomes unsettled again. It has been a bit of a confusing situation. The uncertainties relating to it are probably enough to keep him from adding to his holdings.