Hey there,
Given the cyclical nature of the auto industry, we prefer industry leaders like Magna (MG). Not that the other two companies don't provide some decent upside in a cyclical uptrend, but Magna is likely to be less volatile in a cyclical downtrend. Outside of this past year in which Linamar has outperformed, Magna has been the best performing autoparts company by a large margin over the past 3, 5 and 10 year period. There was a point where stocks like Exco (which I own) were growing at a faster rate, but that has since shifted over the past few years given the pandemic.
That said, Magna commands a premium and of those 3, Linamar does provide the better value. Does it mean it will outperform Magna? Not necessarily. That said, it does look pretty attractive here at only 8x forward earnings and below book value. In comparison Magna is trading at 10x forward earnings and 1.7x book value. The choice comes down to, are you interested in a more stable play, or one that is more volatile but does have perhaps, a little more upside. Personally, I am looking to dispose of XTC given its operational struggles and I will likely take the funds and put them into Magna as a safer, less volatile company. Also worth noting, Magna has a 13-yr dividend growth streak while LNR's dividend growth is non-existant. XTC actually has a 17yr dividend growth streak but I believe that streak may be at risk this year as payout ratio is nearing 100% and it generated negative free cash flow over the past 12 months. There are no concerns with MG or LNR's dividend.
Mat
Mat