Q: I have taken significant losses on a Magna holding over the years - it vulnerability is unfortunate as it has been a historically successful company and model even when the sector wasn’t.
Do you think it is worth continuing to hold and is it an appropriate time for tax loss harvesting?
Do you think it is worth continuing to hold and is it an appropriate time for tax loss harvesting?
5i Research Answer:
MG is very cheap, and does at least have significant non-US business. But, in a likely global slowdown, it is still going to struggle. The stock is very cheap at 6X earnings, and the dividend is now 6%+. The dividend was just raised in February. The balance sheet is OK. The company will get through this, but we highly doubt it does much in the next six months. We would be fine with a tax-loss harvest here with a view for a buyback at some point. Currently consensus calls for EPS growth this year but this will likely be adjusted if tariffs remain. We do think it will be one of the better stocks to own when this is all over, but we can't time that....sorry.