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Magna International: The Future Remains Promising

Roman Luzgin profile picture
Roman Luzgin


  • Magna International is involved in the development of such promising tech as autonomous driving and EVs.
  • The corporation continues to deliver strong results, evident by Q4 numbers.
  • The revenue growth of Magna outpaces the broad auto industry. The guidance for 2018-2020 is positively updated.
  • The company's valuation remains to be low. The current pullback provides an attractive opportunity to invest.

Autonomous driving and EVs should provide a substantial boost for the company

While the automotive industry is undergoing a significant transition, two main technologies are likely to be increasingly adopted by the companies involved in the field: autonomous driving (including advanced safety systems, or ADAS) and electric vehicles. The list of corporations that strive to get to leading positions in these two areas includes such tech giants as Intel (INTC) and Nvidia (NVDA), traditional automakers like General Motors (GM) and BMW (OTCPK:BMWYY), and newcomers such as Tesla (TSLA). I discussed the topic in several of my articles in detail, but I would especially recommend reading the following pieces for some specifics:

Magna International (NYSE:MGA) is another company in the auto segment that seems to be taking the trends seriously. The corporation has undertaken several steps over the last year to become a viable player in the markets for the aforementioned technologies. These ventures seem to provide confidence to the management over the future of the company, which will be discussed later in the article.

For instance, at the end of August last year, Magna unveiled its MAX4 platform for self driving based on multiple lidars, radars, and cameras. The company claimed the solution is ready for the SAE Level 4 (highly automated self-driving, which does not require human driver intervention). The article on Magna from the list above provides more details on the topic.

In October, Magna joined a group of companies, the BMW Group, Intel and Mobileye (MBLY), to "bring autonomous driving technology to market." It is claimed the mission of the alliance is to deliver a

This article was written by

Roman Luzgin profile picture
I write about growth opportunities in different sectors related to technology, providing analyses of fundamentals that are driven by current and future trends. Senior Data Analyst by day, I am building and managing my own portfolio of tech-related securities, which to date has consistently beaten the market.

Analyst’s Disclosure: I am/we are long MGA, BMWYY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (8)

Aschraf profile picture
I like the company and the stock. Too bad I didn't catch the last pullback. I'll add it to my shortlist and hope for an entry at $54. Thanks for the analysis!
08 Mar. 2018
Tesla should have contracted them for first builds of all their cars. They should have stuck with Powertrain and Battery development as they are a Battery company first. They would have had a whole lot less fit and finish problems all while being backed by Magna's sturdy development line. If I had the money lying around, Magna is a good bet.
Roman Luzgin profile picture
In general, totally agree with you. I am not aware (and nobody is) of details of Elon Musk's plan for Tesla as a corporation for 20 years (if Tesla survives), but sticking with the core capability (Battery, visual design, electric infrastructure) is a viable strategy that usually pays off. If such old and established players as Jaguar or Daimler can trust Magna in building cars, why not TSLA?
The only thing is Tesla's cars probably require a different plant structure/setup which Magna may not have or willing to build. Would be interesting to know experts' opinion.
I am not sure how you can evaluate Magna without considering the risk and potential impact of the US pulling out of NAFTA. Does the author have an opinion of what happens to the company and stock in that event?
sell rumors, buy news! Stock is already stupidly inexpensive selling 8 times earnings when I last checked.

No matter what is coming up I assume stock will go up eventually. Mr. Market doesn't like uncertainty and is already discounting negative results
Roman Luzgin profile picture
In the long run such things do not impact stocks significantly, as most (possible) negativity is usually implied in the price. The business will not disappear and Magna will just adapt to new legal realities. The current price provides more than enough margin of safety for any adverse events.
As a long term holder and with buybacks continuing, this stock can pull back all it wants. Fewer shares means higher EPS and awesome long term dividend growth.
Roman Luzgin profile picture
That is more or less the idea, but the fact that the pullback seems to be short-term and not fully justified should also encourage investors. The buybacks will continue as long as Magna generates enough cash, which should be ensured by strong business ventures (which, in this case, include EVs and self-driving).
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