With uncertainty continuing to cloud the future of the auto industry, and other sectors heavily reliant on the metal industry, it’s worth checking the stats for potentially impacted stocks on the TSX index. To catch up, let’s look at an auto-related stock, a metal-weighted stock, and an auto stock with the potential to lead the way in the international electric vehicles market.
Set to shake off the losses of a hard year, Uni-Select is looking at a 12.2% expected annual growth in earnings. This would be an improvement on one-year past earnings of -2.1%, though it does represent a climbdown from a five-year average past earnings growth of 19.8%.
Is this a stock to hold in an uncertain economic climate? Looking past challenges to the auto industry, the stats paint an ambiguous picture: a debt level of 74.5% of net worth may count this one out for the strictly risk-averse investor, though stock pickers looking for market-beating sluggishness might be pleased to see a five-year beta of 0.55 relative to the TSX index.
Down 0.62% in the last five days, Uni-Select seems to be flirting with undervaluation, though it’s currently priced pretty fairly with a P/E of 13 times earnings and P/B of 1.1 times book. A dividend yield of 1.86% could make this a decent stock to hold in a TFSA or RRSP, especially when matched with that expected growth in earnings.
Exco Technologies (TSX:XTC)
With one-year past earnings of -7%, Exco Technologies is in much the same boat as Uni-Select, though its five-year average past earnings of 7% is lower. Its outlook is brighter than that of the former stock, though, with a cheerful 21.3% expected annual growth in earnings on the horizon.
With debt at 8.1% of net worth, it’s got a cleaner balance sheet, too. Up 4.83% in the last five days, it’s popular with investors at the moment, and with a similarly defensive five-year beta of 0.65 relative to the TSX index. A P/E of 11.1 times earnings and P/B of 1.2 times book show the same kind of valuation as Uni-Select’s, though Exco Technologies pays the higher dividend yield of 3.65%.
Magna International (TSX:MG)(NYSE:MGA)
This market leading auto stock had a better year than most in the industry, with a one-year past earnings growth of 13.9% that beat its own five-year average past earnings growth of 7.6%. However, up just 0.07% in the last five days, this stock still has a long way to go before it regains anything like the midsummer high it enjoyed last year.
With a P/E of 7.7 times earnings and P/B of 1.6 times book and debt of 40.3%, you have some indication of decent value if you look past that slightly overheated per-asset ratio, and a so-so balance sheet that may leave the risk-averse investor sitting on the fence.
The bottom line
If you’re bullish on auto stocks, Exco Technologies might be your best bet, with Uni-Select a close second. A five-year beta of 1.29 relative to the market shows that Magna International’s share price oscillates a little more wildly than the TSX, which may put off some passive-income investors, while a dividend yield of 2.52% is let down somewhat by a negative outlook in earnings of -5.6%.
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Stock #1 is a household name – a one-time TSX blue chip that too many investors have left sitting idly in their accounts, hoping the company’s prospects will improve (especially after one more government bailout).
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Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. Magna is a recommendation of Stock Advisor Canada.