Auto makers and/or Auto parts stocks

[benjamen]

I don't see much discussion about the auto industry on this website. I know the big auto manufacturers took a big hit in the recession, but they may be a good deal now. An alternative idea would be auto parts and repair companies. Below I will list various companies that I look at (many wont make the cut). Feel free to contribute your thoughts!

Ford: F, 20 PE, 3.79 Yield
General Motors: GM, 53 PE!, 3.31 Yield
Toyota Moter Company: TM, 11 PE, 1.92 Yield
Genuine Parts Company: GPC, 21 PE, 2.4 Yield
Advance Auto Parts: AAP, 25.6 PE, 0.15 Yield
Standard Motor Products: SMP, 22 PE, 1.54 Yield

[ChadR]

Of these, GPC is on my watch list. I will eventually own this stock. Just right now it's a little too pricey for me. I would like for their yield to be above 2.5% and their P/E to be below 20. While it will never be a core holding, I do like the stock and will have probably 1% of my portfolio allocated to it.

[earthtodan]

I was just looking at MGA, which is a Canada based auto parts supplier with broad OE exposure. Valuation is super cheap even though the 5 year returns have been huge. I had no particular interest in investing in the auto industry but this one has got my attention.

[benjamen]

(02-06-2015, 12:51 PM)earthtodan Wrote: I was just looking at MGA, which is a Canada based auto parts supplier with broad OE exposure. Valuation is super cheap even though the 5 year returns have been huge. I had no particular interest in investing in the auto industry but this one has got my attention.

Nice find, currently P/E of 12, dividend yield of only 1.53, but a small payout ratio (1.52/8.3) = 18.3%

[Roadmap2Retire]

I started investing in MGA last fall. The stock has been fairly flat since then after a minor correction (MGA lowered their 2015 earnings expectations). However, the stock is seriously undervalued and has a great business.

Heres my post detailing why I like it
http://roadmap2retire.com/2014/11/recent...ional-inc/

[Joey Batz]

(02-06-2015, 01:16 PM)Roadmap2Retire Wrote: I started investing in MGA last fall. The stock has been fairly flat since then after a minor correction (MGA lowered their 2015 earnings expectations). However, the stock is seriously undervalued and has a great business.

Heres my post detailing why I like it
http://roadmap2retire.com/2014/11/recent...ional-inc/

Great writeup of a great company. I've stayed far, FAR away from the auto industry for many different reasons (I like companies whose products are not so heavily reliant on heavy R&D and annual releases), but the fact is that almost everyone drives. Owning the number one manufacturer of auto parts is a great alternative to owning the auto makers themselves and hoping that people aren't buying the competition or that the auto makers aren't begging Congress for a bailout AGAIN. As you said, almost every car out there has an MGA product somewhere in it. Now THAT'S a business I can get behind.

Which is why I went ahead and invested in it. Thanks for the "hot stock tip"! Don't worry, I did my own research into the company and its figures to see if it was for me or not.

[Roadmap2Retire]

(03-03-2015, 08:51 AM)Joey Batz Wrote:

(02-06-2015, 01:16 PM)Roadmap2Retire Wrote: I started investing in MGA last fall. The stock has been fairly flat since then after a minor correction (MGA lowered their 2015 earnings expectations). However, the stock is seriously undervalued and has a great business.

Heres my post detailing why I like it
http://roadmap2retire.com/2014/11/recent...ional-inc/

Great writeup of a great company. I've stayed far, FAR away from the auto industry for many different reasons (I like companies whose products are not so heavily reliant on heavy R&D and annual releases), but the fact is that almost everyone drives. Owning the number one manufacturer of auto parts is a great alternative to owning the auto makers themselves and hoping that people aren't buying the competition or that the auto makers aren't begging Congress for a bailout AGAIN. As you said, almost every car out there has an MGA product somewhere in it. Now THAT'S a business I can get behind.

Which is why I went ahead and invested in it. Thanks for the "hot stock tip"! Don't worry, I did my own research into the company and its figures to see if it was for me or not.

Phew...good to hear that you did your own research and didnt just buy it on my word
Welcome as a fellow investor. As you may have figured, its still undervalued. I am looking to add more to my position once the excitement of div increase and stock split dies down.

The parallel I like to draw with Magna and the auto industry is the position of Qualcomm in the wireless world. No matter which smartphone you buy - you either have a chip from QCOM or a license for which QCOM gets paid a royalty (unless you are a Chinese manufacturer who just refuses to pay *grrr*). These are kind of businesses I like to own!

Disclosure: I am long QCOM and MGA.

[Roadmap2Retire]

Magna is seeing quite a runup after the recent upgrade from Deutsche Bank
http://www.benzinga.com/analyst-ratings/...s-sustaine

Still a good buy at the current level, methinks.

In other news, Magna is moving out of its 'royal palace' HQ in order to appear more modest to clients lol
http://www.bnn.ca/Video/player.aspx?vid=...36e8cd1f91

[Roadmap2Retire]

Magna took a beating yesterday (down 5%) after the VW scandal.

11% of Magna's revenue comes from VW.
http://www.bloomberg.com/news/articles/2...ns-scandal

[Kerim]

Buying opportunity? No matter how bad it gets for VW over this, they are still going to sell new cars, and the tainted cars still exist, will still be driven, and will need repairs and parts just like any other.

[Roadmap2Retire]

Yup, I think so. People are not going to stop buying cars because one company cheated on their emissions ratings. Even if consumers go buy other cars, Magna still wins as they provide components for almost every major car manufacturer.

This is what attracted me to Magna's business model in the first place