Magna International : Underperforming the market in 2024...

Magna International is a cheap dividend company that is now trading far below estimates of the consensus price objective.
The tech industry was the main driver of the 2023 stock market rise. It implies that several businesses in a variety of industries are still trading at far lower valuations, which will enable you to purchase the dip and reap significant profits when the market mood improves.

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Wonderful Canadian Dividend Stock: 40% Off to Purchase and Hold Indefinitely

Magna International (TSX: MG) is one such leading Canadian dividend stock that is currently trading 40% below all-time highs. This TSX stock’s dividend yield has climbed to 3.3% due to the stock’s continuous decline. Let’s examine my current positive outlook on this blue-chip TSX dividend stock.

Magna International PriceMar ’23May ’23Jul ’23Sep ’23Nov ’23Jan ’24Feb ’23Apr ’23Jun ’23Aug ’23Oct ’23Dec ’23Mar ’23May ’23Jul ’23Sep ’23Nov ’23Ja…0-30-20-10Zoom1M3M6MYTD1Y5Y10YALLJan 12, 2023→Jan 11, 2024www.fool.ca

A synopsis of Magna International

Magna International is one of the biggest automotive suppliers in the world, valued at $21.8 billion based on market capitalization. It includes 344 manufacturing facilities and 104 product research, engineering, and sales centers spanning 29 countries.
Magna provides systems and parts to several significant original equipment manufacturers. So, the company’s performance depends mostly on automobile and light truck production statistics in markets such as North America, Europe, and China.

What was Magna International’s third quarter 2023 performance?

Magna International had a 15% gain in revenue to US$10.7 billion in the third quarter (Q3) thanks to a 4% year-over-year increase in light vehicle production worldwide. Magna’s top-line increase was offset by decreased sales as a result of labor strikes and fewer assembly lines as its Complete Vehicles division is going through a “program changeover.” Magna ascribed the latter to the introduction of new programs, its acquisition of Veoneer Active Safety, and a strong US currency.

Magna International recorded US$1.46 in adjusted earnings per share for the third quarter of 2018, a 33% year-over-year increase. Reduced input costs, cost efforts, and increased sales all contributed to its profitability rise. During the quarter that concluded in September, Magna’s operating cash flows increased by US$559 million to US$797 million.
Magna International distributes a quarterly dividend of US$0.46 per share to its stockholders. Over the past 30 years, these dividends have increased by 7.8% yearly, demonstrating the stability of Magna’s cash flows. The dividend payouts have been steadily rising, which has greatly raised the effective yield.

For example, if you had invested $1,000 in Magna International stock in January 1994, you might have purchased 82.50 shares of the company. With it, you could have received annual dividends of $16.5, or 1.65% yield. With 82.5 Magna International shares, you might increase your yield to above 15% and receive US$151.8 in dividends annually.

Is the stock of Magna cheap?

Magna International is becoming more and more active in the electric car manufacturing industry. It declared last year that it will invest US$470 million in Canada, enabling the business to expand its production of battery enclosures for electric cars.
Magna anticipates that sales will increase more quickly than the expansion in the manufacturing of light vehicles. However, it still faces challenges from factors including declining consumer expenditure, rising interest rates, and inflation.

Magna projects 1.8 billion US dollars in free cash flow by the end of 2025. Over the following 18 months, Magna International shares should increase by more than 40% if its valuation is set at 15 times future cash flows.

Magna International stock is predicted to rise by more than 23% by analysts in the upcoming year, who are still optimistic.
Is It Worth Putting $1,000 Into Magna International?

Magna International did not make the list of the ten best beginning stocks that our team of analysts—who regularly beat the market—believes investors should purchase in 2024.
Motley Fool Stock Advisor Canada, their ten-year-old online investing service, is outperforming the TSX by thirty-two percentage points. Additionally, they believe that ten stocks are currently superior values.

The stock of Magna (TSX: MG) has decreased by 16% throughout the past year, but it has recently begun to rise. So, should I buy now, or is there still volatility to come?
The shares of Magna International (TSX: MG) have been gradually rising during the past few months. Investors can take a moment to review the history to discover that shares have fallen from the 52-week highs set in January 2023.
Is the company still a good investment now that shares are down 16% from those highs? Or should investors think about selling it when the stock rises in case volatility strikes once more? Let’s examine this.

Magna International CostFeb ’23Mar ’23Apr ’23May ’23Jun ’23Jul ’23Aug ’23Sep ’23Oct ’23Nov ’23Dec ’23Jan ’24Mar ’23May ’23Jul ’23Sep ’23Nov ’23Ja.www.fool.ca 60708090Zoom1M3M6MYTD1Y5Y10YALL Jan 16, 2023 → Jan 12, 2024
Profits appear
To understand how Magna stock has performed recently, investors can first look at earnings. Magna Stock revealed in the company’s third-quarter results that sales had risen 15% year over year to $10.7 billion. That’s compared to just 4% in the same period last year. Moreover, adjusted diluted earnings per share increased by 33% to $1.46 from diluted earnings per share of $1.37.

The stock was able to raise its outlook guidance for the year as sales kept rising. The business now projects a rise in light car manufacturing in China and Europe in 2023. There was a rise from 17 to 17.6 million in Europe and from 26.2 to 27.1 million in China, even though North America should have reached 15.2 million units.
Additionally, overall sales have narrowed down to between $42.1 and $43.1 million as opposed to the earlier-announced range of $41.9 to $43.5 million. The adjusted earnings before interest and taxes margin for Magna stock likewise went up, rising from 4.9% to 5.3% to 5.1% to 5.4%. Lastly,

Additionally, adjusted net income should rise from $1.4 to $1.6 billion to $1.55 to $1.65 billion. Overall, the stock saw some quite noteworthy upgrades.
experts’ opinions: Magna stock is now anticipated to perform well in the future, but not all experts are convinced about that outlook, particularly for the near future. One lowered the stock from “outperformer” to “neutral.” This was done to illustrate a larger point regarding the electric vehicle (EV) market in 2024.

Magna Stock has been investing a lot of money in electric vehicles. The fact that EV adoption has slowed down over the past year suggests that this exposure could make it more vulnerable in 2024. In addition, in terms of its fundamentals, it is still trading at par with historical averages. Therefore, at this price, it’s not a deal.
Having said that, this broad perspective on the EV sector might not last long. Other analysts have continued to express optimism over the stock as a result. Therefore, may now be the ideal time to invest if you’re a patient person.

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What you might obtain

Assuming that Magna stock persists till 2024. The stock takes the better part of the year to rally back to its 2023 highs. To be honest, I think that would make today’s purchase a really good deal. The possible profit should the stock return to its current price of $92 per share, or 8%, as of this writing. Add to that a dividend yield, which as of this writing is 3.26%.

All things considered, Magna stock appears to have a promising future. Does it appear to be an obvious purchase? Maybe not. However, in the not-too-distant future, investors who are patient might see some very substantial profits. To be honest, I would wait until the following quarter’s profits are out. Time will tell until then!