MG:CC - Here's Why Magna International Is a No-Brainer Value Stock
2024-01-02 15:30:00 ET
Magna International ( TSX:MG ) has been one of the harder hit stocks of the last few years. That comes not only from a dropping share price, but also a difficult industry in general.
However, now the tide could be turning with a new year. So here is why it could therefore be the best time to consider picking up Magna stock on the TSX today.
Still here
Over the last few years, Magna stock had to handle a supply-chain disruption like no other. The pandemic led to a sudden stoppage of work, one that created a huge backlog in the automotive parts sector.
However, when restrictions came to an end, that backlog remained. Even used cars increased in price, as cars were simply not on the market. And that continued even as Magna stock tried to get its assembly lines up and running again.
But in the last year things have started to shift. Magna stock is still here, and continues to see huge transformative change. This is especially as it expands within the electric vehicle sector, along with autonomous vehicles as well. It has not only adapted to this space, but has now embraced it.
Finances taking a turn
Now, Magna stock has started to see a positive shift reflected in their earnings reports. Quarter after quarter it seemed like the company wouldn’t improve. However, it looks like now that is coming to an end.
During its most recent earnings report, the company stated its sales increased 15% year over year to US$10.7 billion, compared to a global light vehicle production increase of $4. Diluted earnings also reached US$1.37 per share, as well as adjusted diluted earnings per share up 33% year over year.
This led the company to increase its outlook for adjusted earnings before interest and taxes (EBIT), especially after coming to an agreement on a labour strike. Now, as more and more electric vehicles hit the road, there should be more and more opportunities for growth.
Value abounds
The thing is, value abounds when it comes to Magna stock. It continues to buyback shares, as well as offer a dividend yield at 3.19% as of writing. Furthermore, the company trades at just 16.3 times earnings as of writing, and 1.5 times book value. And with an enterprise value (EV) over earnings before interest, taxes, depreciation and amortization (EBITDA) at just 10, there remains a lot of value to be had.
So now, shares are climbing. Magna stock is back where it was this time in 2023, but still shy of its 52-week highs. Not to mention its all-time highs. Yet with shares up 18% in the last three months alone, it could be a great time to hop on Magna stock. Not just for value, but for growth too.
In fact, should shares reach those 52-week highs around $120 per share? That would provide today’s investor with a potential upside of 54% as of writing! So what are you waiting for? Consider Magna stock today not just for the next year, but at least the next decade.
The post Here’s Why Magna International Is a No-Brainer Value Stock appeared first on The Motley Fool Canada .
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Magna International. The Motley Fool has a disclosure policy .
2024