10 Oversold Canadian Stocks to Buy Right Now

3) Magna International Inc. (NYSE:MGA)

% Decline Over Past Year: ~18%

Forward P/E (As of October 21): 6.61x

Number of Hedge Fund Holders: 16

Magna International Inc. (NYSE:MGA) is engaged in designing, engineering, and manufacturing components, assemblies, systems, and modules for original equipment manufacturers of vehicles and light trucks.

Magna International Inc. (NYSE:MGA) has been tightening its adjusted EBIT margin range for 2024 and remains focused on addressing market changes, targeting continued margin expansion and robust FCF by 2026. Market experts believe that operational excellence activities should contribute to margin expansion. Magna International Inc. (NYSE:MGA) has been restructuring its complete vehicle cost base and has plans to reduce engineering spend. Therefore, it expects strong FCF and margin expansion for 2026 amidst challenges.

Magna International Inc. (NYSE:MGA) has been exploring opportunities to offset the impact of declining EV programs. It is going for a conservative approach to EV programs in North America based on historical data and judgment. While Magna International Inc. (NYSE:MGA) remains optimistic about its value proposition with Chinese automakers expanding globally, it remains committed to maintaining a leverage ratio and will consider share buybacks post addressing balance sheet commitments.

Magna International Inc. (NYSE:MGA)’s proactive measures in the face of the evolving EV market and its commitment to operational excellence and capital discipline place it well to tackle current uncertainties. For FY 2024, the company expects an adjusted EBIT margin of 5.4% – 5.8% and an adjusted net income of $1.5 billion – $1.7 billion. Aristotle Capital Management, LLC, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:

“Magna International Inc. (NYSE:MGA), a Canada‐based global auto parts, systems and assembly company, was one of the largest detractors for the period. The company lowered its 2024 sales guidance, having seen a slowdown in electric vehicle (EV) adoption across its customer base and expecting a halt in Fisker Ocean production. Despite concerns over automakers delaying EV rollouts, we continue to believe in the longer-term investment catalysts for Magna. These include the company’s ability to enhance margins from operational improvements and leverage its distinctive capabilities to supply parts for an increasingly electrified and autonomous fleet of vehicles. Magna specializes in lightweighting—a necessity for heavy internal combustion engines and electric vehicles—and has made years of investments in self-driving technologies. In addition, with leading market share positions in many of its core markets and products, we believe Magna remains well positioned to benefit as content‐per‐ vehicle increases and automotive parts and systems become more complex.”