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NFLX   305.77 (-2.18%)
S&P 500   3,930.71 (-1.70%)
DOW   33,504.54 (-1.30%)
QQQ   282.02 (-1.95%)
AAPL   143.94 (-1.83%)
MSFT   245.05 (-2.06%)
META   114.99 (-6.08%)
GOOGL   97.49 (-2.00%)
AMZN   88.60 (-2.65%)
TSLA   177.71 (-2.60%)
NVDA   160.54 (-3.35%)
NIO   13.01 (+1.64%)
BABA   91.32 (+0.88%)
AMD   70.90 (-3.69%)
T   19.00 (+1.33%)
MU   53.75 (-0.54%)
CGC   3.62 (-16.20%)
F   13.10 (-2.09%)
GE   85.02 (+0.43%)
DIS   93.04 (-3.01%)
AMC   6.74 (-9.53%)
PYPL   72.08 (-2.09%)
PFE   49.36 (-2.70%)
NFLX   305.77 (-2.18%)
S&P 500   3,930.71 (-1.70%)
DOW   33,504.54 (-1.30%)
QQQ   282.02 (-1.95%)
AAPL   143.94 (-1.83%)
MSFT   245.05 (-2.06%)
META   114.99 (-6.08%)
GOOGL   97.49 (-2.00%)
AMZN   88.60 (-2.65%)
TSLA   177.71 (-2.60%)
NVDA   160.54 (-3.35%)
NIO   13.01 (+1.64%)
BABA   91.32 (+0.88%)
AMD   70.90 (-3.69%)
T   19.00 (+1.33%)
MU   53.75 (-0.54%)
CGC   3.62 (-16.20%)
F   13.10 (-2.09%)
GE   85.02 (+0.43%)
DIS   93.04 (-3.01%)
AMC   6.74 (-9.53%)
PYPL   72.08 (-2.09%)
PFE   49.36 (-2.70%)
NFLX   305.77 (-2.18%)
S&P 500   3,930.71 (-1.70%)
DOW   33,504.54 (-1.30%)
QQQ   282.02 (-1.95%)
AAPL   143.94 (-1.83%)
MSFT   245.05 (-2.06%)
META   114.99 (-6.08%)
GOOGL   97.49 (-2.00%)
AMZN   88.60 (-2.65%)
TSLA   177.71 (-2.60%)
NVDA   160.54 (-3.35%)
NIO   13.01 (+1.64%)
BABA   91.32 (+0.88%)
AMD   70.90 (-3.69%)
T   19.00 (+1.33%)
MU   53.75 (-0.54%)
CGC   3.62 (-16.20%)
F   13.10 (-2.09%)
GE   85.02 (+0.43%)
DIS   93.04 (-3.01%)
AMC   6.74 (-9.53%)
PYPL   72.08 (-2.09%)
PFE   49.36 (-2.70%)
NFLX   305.77 (-2.18%)

Magna International is Your Auto and EV One-Stop Shop Stock

Key Points

  • Magna produces auto parts and systems to the 50 largest automobile brands worldwide
  • Magna will begin production of its Fisker’s EVs in November
  • Russia and a strong US dollar took a large bite out of Q2 2022 earnings
  • The Company sees a second-half 2022 rebound from semiconductor supply and China stimulus

Magna International is Your Auto and EV One-Stop Shop Stock Worldwide vehicle parts manufacturer Magna International (NYSE: MGA) is not a household name yet is the largest automotive supplier in North America and fourth largest in the world. The Company is contracted with over 50 global customers including the largest automotive brands in the world like Ford (NYSE: F) and General Motors (NYSE: GM) as well as major European players like Volkswagen (OTCMKTS: VWAGY) and BMW. The Company manufactures everything from doors, seats, legacy and electric powertrains, and transmissions to manufacturing complete automobiles. Magna is a one-stop shop and the largest contract manufacturer for automobiles in the world with annual production capacity of over 200,000 vehicles.

Riding the Automotive Megatrends

They are on the cutting edge of trends in the automotive industry like electrification, electric vehicles (EVs), energy storage systems, autonomous driving, mobility, and connectivity. While most of their nearly $39 billion of sales comes from legacy automobile business, it’s positioned to benefit from megatrends in the auto industry. The original Tesla (NASDAQ: TSLA) killer,  Fisker (NYSE: FSR) will start production of its highly anticipated EVs in November. Magna is handling the complete manufacturing of the EVs. While they face the continuous headwinds of supply chain constraints, inflationary cost pressures, and a strong U.S. dollar, they are also reaping the tailwinds of strong auto demand and low dealer inventory levels. The stock is a one-stop shop for investors seeking a diversified major player riding the megatrends in the auto industry.

Magna International is Your Auto and EV One-Stop Shop Stock

Attractive Pullback Levels

Using the rifle charts on the weekly and daily time frames provide a comprehensive view of the price for MGA stock. The weekly rifle chart breakdown triggered on the rejection of the breakout attempt at the $65.24 Fibonacci (fib) level. The weekly downtrend has a falling 5-period moving average (MA) resistance at $53.39 followed by the weekly 15-period MA resistance falling at $57.69 as the weekly stochastic falls to the 20-band. The stock failed three separate attempts to stay above the weekly market structure low (MSL) buy trigger at $62.99 causing shares to plummet towards the weekly lower Bollinger Bands (BBs) at $46.55.  The daily rifle chart has been in a downtrend led by the falling 5-period MA resistance at $49.54 followed by the 15-period MA at $53.18. The daily lower BBs sit at $45.35. The daily stochastic has crossed up but is stalling at the 10-band. It needs to crack the 20-band to gain upside momentum. Attractive pullback levels remain at the $46.26, $44.25 fib, $41.99 fib, $38.32 fib, $34.65 fib, and the $31.02 fib.


Second Half 2022 Recovery

On July 29, 2021, Magna released its fiscal second-quarter 2022 results for the quarter ending June 2022. The Company reported an earnings-per-share (EPS) profit of $0.83 excluding non-recurring items versus consensus analyst estimates for $0.92, a (-$0.09) beat. Revenues rose 3.6% year-over-year (YoY) to $9.36 billion beating analyst estimates for $8.92 billion. The Company saw a 2% rise in light vehicle production, largely driven by a 14% jump in sales in North America. FX translations took a (-$629 million) bite out of earnings as well as lower sales in Russia. Higher input costs, Russia, and operating inefficiencies in Europe resulted in a (-41%) YoY drop in adjusted EPS from $1.40 to $0.83 and diluted EPS of (-$0.54) versus $1.40 in the year ago period. This was affected by a (-$1.24) non-cash impairment charge on its investment in Russia. However, the Company is optimistic for a second-half recovery. Magna raised its full-year 2022 revenues to come in between $37.6 billion to $39.2 billion, up from prior guidance of $37.2 billion to $38.9 billion versus $37.75 billion consensus analyst estimates.

Looming Headwinds

Magna CEO, Swamy Kotagiri expects supply chain problems to continue through 2022. These include semiconductor shortages to parts manufactured in China with COVID lockdowns. Input costs were and will remain elevated. He did remind analysts, “The stronger US dollar relative to other currencies, in which we operate, particularly the euro, is negatively impacting our reported results, and there is some risk going forward that high inflation and rising rates will impact auto consumers.”

Strong Tailwinds

The Company is experiencing strong auto demand with low dealer inventories and tight supply. Semiconductor supply constraints are expected to ease in the second half of 2022. The easing of China COVID lockdowns in addition to a government economic stimulus package should improve supply chains and bolster auto demand.

 

Should you invest $1,000 in Magna International right now?

Before you consider Magna International, you'll want to hear this.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Magna International (MGA)
3.1242 of 5 stars
$58.42-1.4%3.08%18.14Hold$72.77
Ford Motor (F)
2.2672 of 5 stars
$13.10-2.1%4.58%5.95Hold$17.91
General Motors (GM)
2.7782 of 5 stars
$37.65-2.9%0.96%6.38Moderate Buy$51.74
Volkswagen (VWAGY)
2.3795 of 5 stars
$19.37+0.4%2.74%5.43Hold$230.00
Fisker (FSR)
1.873 of 5 stars
$7.15-3.1%N/A-4.13Hold$14.92
Tesla (TSLA)
2.9244 of 5 stars
$178.18-2.3%N/A55.05Hold$278.43
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Jea Yu

About Jea Yu

Contributing Author: Trading Strategies

With over 20 years of active participation and analysis of the US equities, options and futures markets, Mr. Yu brings fresh insights into the workings of the financial markets. He has published four books by esteemed publishers McGraw-Hill, John Wiley & Sons, Marketplace Books and Bloomberg Press. His brainchild, the Underground Trader, was voted Forbes Best of the Web for four consecutive years under the active trader category. He has been a featured speaker all over the country at various expos and seminars who enjoys a standing-room-only reception in the largest convention halls from New York to Las Vegas. He has been quoted and featured in USA Today, Wall Street Journal, Traders Magazine and the Financial Times and various trade publications like Stocks & Commodities, Active Trader and Online Investor. Mr. Yu has a B.A. in Liberal Arts and minor in Business Administration from the University of Maryland.
Contact Jea Yu via email at JeaYu21@gmail.com.