Magna International Inc.: Invest For Low Valuation, High-Yield With A Total Return Kicker

2019-08-12

Introduction

I have never been a fan of investing in automotive manufacturers like Ford or General Motors.  I’ve always found the industry much too cyclical and too difficult for the companies to make any money.  However, automobiles are certainly a major purchase for almost every person and family, not only in America but throughout the world.  Consequently, the importance of this industry cannot be denied.

Therefore, instead of investing directly into automobile manufacturers, investors might consider companies such as Magna International Inc. (MGA) one of the largest and most respected automotive suppliers in the world.  I produced a video and a short write up on this company about a year ago (August 27, 2018), and was recently asked to do a follow-up.

Here is what I found when I went back to revisit the company.  The company did go on to report good earnings growth for 2018.  However, earnings and revenues disappointed for the 1st quarter of 2019 and the stock price has been flat to down so far this year.  On the other hand, they just reported a strong 2nd quarter where both earnings and revenues beat estimates.

Magna International is a Canadian based Auto Parts Equipment company that has had excellent growth over its lifetime, but the market has generally valued it at a low P/E ratio of 9 to 10. In this video, I will analyze the company and identify possible return opportunities using these historical norms and earnings forecasts based on analysts’ consensus estimates.

FAST Graphs Analyze out Loud Video: MGA: High-Yield, Low Valuation Total Return Opportunity

Summary and Conclusions

Although I’ve never personally invested in this company, I do feel that it possesses some interesting characteristics that some dividend growth investors might be attracted to.  Therefore, I thought I would share it as a featured FAST Graphs Friday offering to our The Dividend Kings’ subscribers.  Although this company may not suit everyone, it does offer some intriguing future return potential that’s based on valuation, growth and current yield.  Therefore, some of you may want to take a closer look into researching this A- rated dividend growth stock with low debt further.

Disclosure:  No position.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.

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