MG:CC - Could Magna International Stock Help You Retire a Millionaire?
2024-01-05 16:20:00 ET
Becoming a millionaire is far from an easy goal, and plenty of factors come into play when growing one’s portfolio to this level. However, for those who invest consistently and look to buy high-quality growth stocks that can provide market-beating returns, anything is possible.
In the search for millionaire status, most investors focus on specific high-growth sectors. These sectors typically come with higher risks. But the question is whether lower-beta companies like Magna International ( TSX:MG ) may be better picks for investors seeking millionaire status and hoping to maintain this status over the long term.
Manga is one stock that has created impressive long-term value due to its solid fundamentals. The company focuses on designing and manufacturing components, subsystems, assemblies, systems, and modules for original equipment manufacturers of light trucks and vehicles globally. After a tough 2022, this company’s stocks ended 2023 with a silver lining for a better 2024 and beyond.
Let’s dive into whether this stock may fit into your future million-dollar portfolio.
Magna International made some remarkable progress in 2023
Over the past few years, Magna International faced major obstacles like supply-chain disruption owing to the pandemic. During this period, manufacturing and distribution of automobiles came to a sudden halt, posing a major backlog in this sector.
These obstacles were a major blow to Magna International’s financials for a long time. However, recently, things seem to have changed for the better. According to a recent report, Magna International’s sales saw a 15% year-over-year increase to US$10.7 billion. Furthermore, its diluted earnings also grew to US$1.37 per share, and the adjusted diluted earnings witnessed a year-over-year growth of 33%.
The company also offers a dividend yield of 3.2% to investors. This is a sign reflecting MG share prices have been climbing since 2023. As the prices are 18% higher than it was in the last three months, analysts suggest time is favourable to purchase MG stocks.
As interest rates fall, this could be a worthwhile stock to buy
Magna International has faced major setbacks lately on the company’s path toward financial growth and better returns. It began with a 2020 chip shortage that posed a threat to the automobile industry. This was followed by interest rate hikes, which caused a drop in demand for cars among customers. These factors affected the financial performance of this automobile company for a very long time.
However, with chip shortage issues mostly resolved and an upcoming decline in interest rates, Magna is looking forward to a prosperous 2024. Both the Canadian and U.S. automobile industry is on a path of recovery as supply chain issues recede.
Magna International utilized this period to innovate its product line and introduce electric vehicles (EVs). This company launched electric vehicles belonging to a diverse price range and various car types to cater to the demands of their large customer base. With this approach, Magna is anticipating better growth for investors than in pre-pandemic times.
Analysts thus consider MG stocks worth buying to hold for a longer period to reap benefits from a 3% dividend yield.
Pledge to reduce fossil fuel use increases EV demand
In a U.N. climate summit, more than 200 countries, including the U.S. and U.K., pledged to work towards reducing the utilization of fossil fuels. As transportation is the biggest consumer of fossil fuels, 2024 might witness a major shift from fuel-based vehicles to EVs.
To meet this shift, Magna International is well equipped to cater to the demand for e-power trains and other electronic vehicles in their diverse product range. Along with its focus on improving efficiency in the manufacturing and delivery of products, Magna International also focuses on the production of futuristic cars.
Bottom line
Keeping these factors in mind, one can say that the performance of Magna International stock will likely improve in the upcoming one or two years. So, if you are looking for stocks for a long-term investment to help plan your retirement, Manga International is an intriguing pick as we kick off the new year.
The post Could Magna International Stock Help You Retire a Millionaire? appeared first on The Motley Fool Canada .
Fool contributor Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Magna International. The Motley Fool has a disclosure policy .
2024