2 Value Stocks to Buy Before the month of July


The S&P/TSX Composite Index shed only five points to close out the week, on the 19th of June. North American markets have been shaky with the arrival of spring. This should come as no surprise given the mountain of troubling economic data. Unemployment rates have soared in Canada and the united States, even as states and provinces are in the pursuit of a reopening. Today, I want to hunt for the value of the shares on the TSX. Unfortunately, this is not an easy task, because the ratings have climbed in recent months.

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.


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