Martinrea (MRE.TO)

Very good management. Strong numbers. They’ve been growing. Have put some new platforms in place in the US. Did a hostile acquisition. Very strong European growth. They are more levered to the use of aluminum parts in automobiles than any other manufacturer, which will be a growing area in autos. Trading at about 7X earnings and 3X operating cash flow. Dividend yield of 1.37%.

(Market Call Minute) He does not like the original products manufacturers. He prefers the secondary market.

Has strong season tendencies when investors are buying cars. End of Jan until early May of each year is the best period to own. Recently it broke a support level and established a downward trend. Look for better opportunities elsewhere.

(Market Call Minute.) At this price, you can Buy it, but be prepared to see it move lower.

The auto parts companies have really gotten hammered lately. Thinks some investors feel it is the end of the growth cycle. This was the weaker of the 3. Had some production problems in ramping up new plants over the years, but thinks that is behind them now. Prefers Linamar (LNR-T) which is the cheapest one for the growth going forward.

The whole group has pulled back on worries that we are peaking on the auto cycle. This is down to 6X earnings and generates really good cash flow. Has some plants in Europe.

(Market Call Minute.) Has been frustrating because its valuation has been really cheap, along with Magna (MG-T) and Linamar (LNR-T). However, price momentum has been terrible. He would want to see the chart turn back up, and would prefer one of the other 2.

(Top Pick Jul 7/15, Down 34.48%) The sector is right out of favour. It was cheap and now is cheaper. It may be a value trap, but he has just added more. Good exposure in Europe.

Owns Linamar (LNR-T) and Magna (MG-T). We are lucky in the Canadian market in that we have a good choice of great companies. This one is the smaller of the 3 big ones. It is cheap and is a turnaround, so this would be a value play. It possibly has more upside in the short term as they get their business turned around. Forward earnings is very, very cheap. A good name.

They are all trading at very low multiples. LNR-T came out with a great quarter and is continuing to sell off. They all trade at great multiples. We are possibly in the 7^th or 8^th inning of the game here. He has taken down his positions, but continues to hold them here.

It is a volatile stock. You have to be careful to not assign too much percentage to a stock this volatile.

There were issues going back years that are out of the way now. They are benefiting from growth in the auto business. He is not that keen on the sector right now, however.

The auto parts sector is vulnerable. Look for something to turn in the earnings. If you see that a company’s earnings are good and that they beat analysts’ expectations, generally speaking you are going to be able to have a completely legal information advantage over most of the market.

Still recommends this at this price. The stock is suffering from the worries about the downtrend in autos. On the positive side, they have the best growth in the use of aluminum. Very well positioned in the European market, especially in the European luxury market. Also, have growth in the US. Trading at 6-7 times earnings, so valuation is cheap.

He has owned this and LNR-T, but owned them early in the auto cycle. He just sold LNR-T in August. The auto cycle is long in the tooth. He prefers auto repair facilities.