Is this a pound the table and buy moment for Magna?

I work at VW , There are still major supply issues out there, the Russia- Ukraine war has thrown a curve ball to 2022. In its EV FUTURE, AUDI was suppose to launch the all electric AUDI Q4-ETRON in early 2022. This is the vehicle for the masses. However, delivery to the North America has been delayed again for a second time. The company stated that the first 6 months of 2022 new car sales would be slow. Yes, vehicles are are arriving at dealers but these units are for pre sold units where individuals have been waiting for them for 6 months. Many dealers have paper sales of 250- 300 pre sold units per dealer. As a salesperson, you only make your commission when the car is delivered. Because of the war there may be further delays. Investing in AUTOMOBILE Industry right now may not be the most prudent thing to be doing because there is further downside risk. I would revisit this sector in June -July of 2022 to see if the outlook has changed.

Obviously tensions in Europe are concerning. If it impacts Germany in any way, that will definitely be a material situation for the company. So yeah, escalating tensions and war is not a good thing.

Heightened tensions and the fear of rising material costs are what is causing this selloff right now. Is it overdone considering what is out in the open and known today? Absolutely. But if tensions rise and this gets worse? It becomes a harder thing to predict.

I like your thoughts Dan that is how I feel as well.

Obviously the situation creates uncertainty I know Magna has large operations in Europe.

I wasn't planning on putting huge cash to work here, but I was thinking of lower my average cost a bit (may a 30% top-up) and calling it day.

I work at TD (in commercial lending) and I receive a daily analyst report on the companies that securities tracks from our wealth team. I have asked 3x on Magna update and it's still crickets.

That being said @ 12.5 p/e at this price, assuming WW3 doesn't happen and limited Russian exposure, I think I will likely top-up Monday morning.

Hey there. I actually answered this on the question below this one! I'll just paste our thoughts below:

It's certainly an interesting situation. The company's Russian operations idling are unlikely to have a material impact on the company. As mentioned, the company operates 6 plants out of 104+, and those plants employ about 2500 of its 158,000 total employees.

In my opinion, if you bought Magna right now and held it for the long term you would be absolutely fine. However, is that the BEST strategy? The main issue here and the reasoning we've moved to Neutral status on the Bull List until some things become clearer is simply the uncertainty in terms of how this war will impact other European countries where Magna does have lots of operations. Then we have to consider how rising material prices/supply chains/inflation will hit the bottom line. This company has been very good at reporting its updated guidance in light of current issues. But considering it reported earnings not even a month ago, it's likely we don't hear about current headwinds for several months.

The entire sector is under a large amount of pressure, especially with the release of Martinrea's results. If we strip out the pandemic, which was very unusual circumstances, this is the first time the Martinrea posted a loss on a quarter since 2016.

Now, that's not to say that Magna will be impacted the same way. It may be able to source cheaper materials and may have better access to supply lines due to its Blue-chip nature. We were willing to leave the company on the Bull List in the midst of supply chain issues. In fact, a main part of our thesis was that Magna was being discounted because of these issues that will be short-term in nature. However, now that the war has broken out, which is an event that was impossible to predict in advance, supply chains may drag on longer, material costs may rise even further and now we have some of its operations being halted. This is why we are in a wait and see mode with Magna.