By J. Royden Ward, Editor of Cabot Benjamin Graham Value Letter
From Cabot Wealth Advisory 1/17/10 Sign up for free Cabot Wealth Advisory e-newsletter
Magna International ‘A’ (MGA) is headquartered in Aurora, Ontario. Magna designs and manufactures a diversified line of automotive components and vehicle systems for automakers throughout the world. The company is gaining significant market share because of its manufacturing flexibility, dependability and geographic reach.
Automotive manufacturers are opting to outsource part of their operations to a few large component and system makers like Magna rather than outsource to many small component makers. The outsourcing trend is helping the company to expand rapidly and garner a larger share of the market.
Sales likely increased 37% in 2010 and could increase another 12% in 2011. Earnings improved from a deficit of $1.34 per share to a profit of $4.20 per share in 2011 and another profit of $5.00 in 2011. At 14.6 times our 2011 EPS forecast, MGA shares are quite reasonably priced. The company recently raised its dividend, which now yields 1.2%.
J. Royden Ward
Editor of
Cabot Benjamin Graham Value Letter A lifelong investment professional, J. Royden Ward applies his 40 years of investment research, portfolio management, writing and publishing experience to his role as analyst and editor of
Cabot Benjamin Graham Value Letter, which is directed to long-term investors seeking a guide to profitable value investing based on the time-tested systems originally developed by Benjamin Graham, the Father of Value Investing. A second-generation disciple of Benjamin Graham, Roy in 1969 pioneered the development of a computerized model that applied the formulas developed by Graham using a unique ranking system. Today, Roy applies his system to two models in the
Value Letter.