Investment Q&A

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

Q: Hi, Magna's recent acquisition in Germany has received praise from most analysts. However, stock price appears to languish and trade even below the level stock was trading before this announcement ($72).There was also huge volatility/trading, on first two days after this news ( high of $74.50 and low of $68.50).I started a position in Magna recently and would appreciate your comments. Thanks

Q: Hi Team,
Could you provide your view on todays news from Magna?
Also, I was considering selling my Shawcor, (SCL) to add to my MG position. Which company do you think will do better over the next 2-3 years going forward?

Q: Hi Peter and Team,

I have held Magna for over 2 years now and have a pretty sizable paper gain. Just wondering what my exit strategy should be for Magna. Thanks.

HS

Q: Quite the reversal in MG today. Did something come up regarding the acquisition or do you see this as profit taking? Thank-you.

Q: Would you please give me your favourite 3 (non energy) buys today from each of the Model and Growth portfolios?

Thank you. Cathy

Q: Good Morning Peter, Team
Is MG [Industrial sector] Large, Mid or Small Cap? Thank you. sarah

Q: Hi - can you please provide your comments re Cdn auto parts sector? Both these stocks have pulled back slightly and I'm wondering about taking a position. If either, would you prefer LNR or MG? Others?
Thank you as always

Q: I am a little confused on the ACB Share Price for Magna in your recent report on the Balanced Portfolio. It states a price of $55.72 with a total return of 9.1%. I was wondering if the stock split has been factored in to this assessment. Please keep up the excellent work.

Q: What's happening with Magna? The stock has been in steady day-by-day decline for the past 2 weeks and lost 10%. I am surprised that the sale of interiors unit has such effect on the stock... US economy is booming and people are buying new cars, I'd expect MG to do well in such environment...? Is your rating/views of MG still unchanged since your report 2 months ago?

Q: Hello Peter & Team,

Have noticed both are off recently - MRE about 9% in a month & MG about 10% in the past couple of weeks.

Also noticed Auto sales have been reporting a little weaker than expected domestically but while internationally has been a little more promising.

Do you think this is the reason? or is there something else at work here driving these down? I got out of MG shortly after the split but still hold MRE at just under $10. Would you recommend I hold tight or take my profit - it's May so go away?

Thanks for all you do

Gord

Q: Is Magna or Linamar the better buy? I have no sector exposure at present and a long-term horizon. Thanks!

Q: Response to Magna selling some of the company has resulted in a negative market reaction. Could you please provide your outlook going forward. I believe you gave this company a B+ in your report.

Q: 5i
Recently Magna had a 2 for 1 stock split .
Could you tell me when that happened and what was the actual pre and post stock split prices ?
Thanks
Bill C.