Investment Q&A

Q: Hello Peter and the 5I team

What are signs of a value trap?? Do you have a check list that you can follow? I am wondering if MG could be a value trap. I heard that a good sign of a value trap is a low P/E ratio compared to historic levels ( this may seem like a obvious sign). What things do you look for? I was wondering what your general opinion is on MG and do you feel that the car parts cycle is over or on a decline?

Thanks

Q: What is your exit strategy for cyclical stocks?

I am referring to Magna. It has been noted many times that is it a cyclical stock. Your start cost of MG in the Balanced Equity portfolio is $55.72, You rode it up to $74, and back down to $44 and never seemed to consider selling it along the way. So when do you sell it, or are you "buy and hold"?

Paul J.

Q: I currently hold both LNR and MG in my RRSP.MG has been the worse performer of the two stocks.I realize that MG is probably a screaming buy from a valuation perspective but find it inconceivable that it will hit the $70 mark any time soon.I am contemplating replacing it with Alaris which has also been beaten down but will at least
pay a decent dividend while I wait. Thanks, Joe

Q: I bought a half position in Magna at $49.23. Time to add more at $44 should I hold off. Thanks

Q: Magna has been hit hard the past couple of weeks with a 5% loss today. Are you aware of any significant changes causing this.

Thank you,

Bob

Q: Both Magna and CXR are taking a big dip today. Any reasons why?

Q: Which stocks will benefit most from the low Canadian dollar. I had thought that exporters like Magna would, but the market has not been any kinder to it. Can you suggest a few names to consider?

Q: How much of a threat, mid to longer-term, do you feel the following will pose for Magna? First, sharing services Uber and Lyft, and second, developed country younger generation's disinclination for purchasing cars. Will higher demand for vehicles in developing countries outweigh the above, and is Magna well positioned to continue to do well as a Tier 1 supplier to the industry? Thank you. Ted

Q: Which of the following stocks, if any, would you add to at this time...my current weightings would allow this: MG, DH, SIA, TFI, WSP...reduce my question credits as you like. Thank you.

Q: Happy New Year to you all .

I own both Magna and LNR ,I bought Magna at 60$ should I take my loss and move on?
Your thoughts on LNR.

Thanks for your advice.

Q: Would you recommend buying this stock at this time

Q: Any effect on the Notice of Intention to Make a Normal Course Issuer Bid.

Thanks,

Bob

Q: Hold some Magna and want to buy more. Is this a good time? How concerned should I be if emerging markets and possibly Canada remain in recession?

Q: Dear 5i
I'm considering investing in the auto sector but am having a tough time deciding on which one of these three ...mg , lnr or xtc . I currently own bos and will likely be topping up it shortly but I wasn't sure if it belonged to the same sector . Acq is also down significantly and thought this might be the the time for a half position as well . Which of these stocks would you favour at this time ?
Thanks
Bill C.

Q: In a recent report by Veritas they feel LNR has significantly more upside than MG.

I currently own MG do you think it is worth selling and substitute LNR. Here are Veritas's comments:

Linamar (LNR) - $69.41 – Veritas: Buy (PT $97); RBC CM: Sector Perform (PT $91)
Magna International (MG) - $62.34 – Veritas: Buy (PT $62.70); RBC CM: Outperform (PT $68)
The company now warns that the current emission issue could impact roughly 11 million vehicles (some models from 2009- 2015). In prior recall related events (i.e. GM, Hyundai, and Toyota), the ultimate loss of market share was largely short-term in nature. As a result, Vertias suspects that the fallout of VW’s emissions-gate could be short lived, with VW losing less than 25% of its U.S. sales. Between Linamar and Magna, the auto-parts supplier we cover, Linamar has less exposure to VW. In 2014, VW was not among LNR’s top four customers (suggesting VW contributes less than 7% of LNR revenue); in case of Magna, VW contributed roughly 11% of MGA’s 2014 revenues. Between Linamar and Magna, Linamar has less exposure to VW. Thus, for anyone who is looking to invest in a mid-cap autoparts supplier, Veritas recommends buying LNR. That said, given the diversified customer base Magna has, Veritas believe that the impact of VW event will be minimal, as VW lost business will be picked by other OEMs.

Q: Volkswagen said that they installed software programmed to switch engines to a cleaner mode during official emissions testing. Since Magna makes parts for them, it probably explains why the stock is down 8%. Do you or a member know if Magna develops anything involved with the engine or software that controls it? If not, how about Linamar or MartinRea?

Q: Please suggest a few companies listed on Canadian exchanges,but who get most of their revenue from the U.S.A.

Q: At the present time there seems to be a bottleneck in the TPP deal
with respect to auto and auto parts manufacturers.Between MG and LNR,which one is less likely to be impacted if a TPP deal reduces
the the minimum percentage of auto parts required in cars
manufactured in the U.S.,Canada, and Mexico as outlined under NAFTA? Thanks, Joe

Q: Magna is down quite a lot today. Is it a good entry point?
Is it still a good mid term buy?

Q: Hi, Magna's results looks like a slight beat on EPS and Sales, despite FX impact of strong USD. Could you please comment on the quarterly earnings release and 2015 outlook? Thanks