The value of stocks are rare on the TSX right now
Back in March, investors have had the opportunity to pounce on a mouth watering discounts. This decline did not last long, so those who are looking for the value of the stocks had to make a choice lightning. Fortunately, there are still some good options available in specific sectors.
Auto sales have plummeted because of the COVID-19 pandemic. In 2019, there was already a dip from 2018, as Canadians were wrestling with the very high debt levels. The financial situation for individuals has worsened because of the crisis. However, a progressive reopening holds a little hope for the automotive sector. The two value stocks, I want to watch today are the largest auto parts manufacturers in Canada.
Why I am always the targeting of these auto stocks
As I had mentioned in the article linked above, AutoCanada is a fragile to take this summer. But the top manufacturers of automotive parts is fundamentally sound.
Magna International (TSX:MG)(NYSE:MGA) is the first of the value of the stock of I want to watch. The company is the largest manufacturer of automotive parts in North America by sales of original equipment parts. Its shares have fallen by 13% in 2020 as of close on June 19. However, the stock has increased by 53% over the last three months.
The company released its first quarter 2020 results on 7 May. Sales fell 18% year on year to reach $ 8.7 billion, as the production of light vehicles decreased by 27%. Magna has estimated that the COVID-19 pandemic hit of nearly $ 1.1 billion in sales and $ 250 million on income from operations. Even still, the cash from operations increased 8% from a year earlier to $639 million.
The shares of Magna last had a price-to-earnings (P/E) ratio of 14 and a price to book (P/B) value of 1.3. This is attractive value territory relative to their industry peers. In addition, Magna also has a fantastic balance sheet. The board of directors last declared a quarterly dividend of $0.40 per share, which represents a 3.6% yield.
Linamar (TSX:NRL) is the second largest auto parts manufacturer in Canada. Shares of Linamar, have declined by 21% in 2020 up to now. The stock has increased 22% over the past three months. Linamar has published its first quarter 2020 results on May 13.
The company has suffered a steep 41% drop in net income of $55.7 million. Overall, sales were down 22% to $1.09 billion in Q1 2020. In addition, its industrial segment product sales decreased 36% to $212.1 million. Fortunately, the company has reiterated that the COVID-19 pandemic would have the most significant impact on the first quarter. With luck, the re-opening means that the worst is past for Linamar and its peers by 2020.
Shares of Linamar last had a favorable P/E ratio of 6.6 and P/B value of 0.6. This is a nice inventory of pick up at the end of June.
Fool contributor Ambrose O’callaghan has no position in any stocks mentioned. The Motley Fool recommends Magna Int.