A global supplier of technologically-advanced automotive systems, components and complete modules. The Company provides complete vehicle design, engineering and assembly services to Original Equipment Manufacturers.
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Magna International (MGA)
Start Share Price $48.36
Based in Toronto, Magna designs and developes automotive supplies. They build everything from engine parts, to interior and exterior trim. They have a pretty impressive list of customers which includes just about every auto maker that I can think of.
Magna was started in the garage of Frank Stronach back in 1957 and has since grown to become one of the biggest and most diversified auto suppliers in the world. They had the dual class shares for a number of years but have recently converted shares into a single class. They have approved a share buyback program for the next year, with their sights set on the repurchase of a little over 3% of total outstanding shares.
Magna posted sales of $5.9 billion for the third quarter ended September 30, 2010, an increase of 27% from the third quarter of 2009. The auto industry has been in the turnaround mode for a while now and Magna looks to be able to gain market share during this comeback. With around $2.7 billion cash and less than $1 billion long term debt or other liabilities, the balance sheet is in great shape to persue avenues of growth going forward.
Forecasting 2011 earnings per share of $4.20, the current P/E reflects only around 12x, compared with Magna's peers of between 14 and 15, I believe the share price would be more reasonably priced above $60. This reflects about a 20% difference and the prospects going forward could be much greater than this.