Linamar Corp LIMAF

Teal Linde - BNN - TOP PICK again

[Possibleidiot01]

LINAMAR (LNR TSX)

Linamar, as a company, is doing well overall, largely because of its industrial segment which includes its Skyjack aerial lift business and its agriculture machinery business. The results of its industrial segment is actually masking its much weaker auto parts business which has been basically operating at trough margin levels. But here's the opportunity - its largest industrial business, Skyjack, is expected to continue to perform well this year because its entire industry is still enjoying high backlog levels. Linamar is optimistic about taking market share likely because its manufacturing is domiciled in Canada where they take advantage of the weaker Canadian dollar. Based on its quarterly results announced last month, where the company reported solid organic growth, strong growth from acquisitions, and attractive margin expansion, its auto parts business appears to have finally turned a corner. Analysts had expected overall margins to be lower than the actual result, and management has raised its margin outlook further.
 

Linamar Corp(LNR-T)

17/06/2024

 

About half profits come from non-auto businesses such as Skyjack and agricultural equipment. Auto parts are still under-earnings from historical norms. 

Market gives a higher multiple to industrial manufacturers than auto parts. So as it becomes more diversified, potential for multiple expansion. He likes the diversification. If it continues to grow the fundamentals, the stock will eventually follow. Yield is 1.5%.

MG trades at 7.4x 2024 expected earnings, despite missing expectations, gave weak guidance, and the stock came off. Whereas LNR beat expectations, raised guidance, yet trades at 6.5x.

(Analysts’ price target is $87.50)

transportation equip & components

 

$67.360

Owned