In many ways, the stock movement is more about speculation than about the financial fundamentals of the stocks, especially when it comes to trading. Stocks move up and down based on what investors think of them and how much they are willing to pay for these stocks, and this perception can be a powerful enough force to push a stock to prices that are aggressively detached from its financial fundamentals.
In the realm of speculation, stocks like Tesla retain an edge. The company gets a lot of limelight thanks to its smart advertisement as well as due to the CEO Elon Musk’s charisma. Musk has emerged as an internet “celebrity” that a hefty portion of the public respects (or at least listens to) when it comes to technological innovation.
His online presence has allowed him to not only give his own Tesla stock a boost (on a few occasions) but also manipulate the value of other assets as well (like Dogecoin). And despite the fact that Tesla has shown monstrous growth since the pandemic, if you are looking for a stock that’s more fairly priced and in-tune with its financial fundamentals, Magna International (TSX: MG)(NYSE: MGA) is the local alternative that should be your first pick.
A mobility technology company
Unlike Tesla, which has been making waves in the EV market since its inception and is one of the leaders in this market, Magna International works more in the background. As a mobility technology company, Magna’s product lines focus more on different parts of the vehicles (and innovative solutions related to them) compared to full vehicles.
That doesn’t mean Magna isn’t capable of or doesn’t produce fully functional vehicles, however. The company has produced 3.7 million completed vehicles in about 64 years. It also maintains a huge global presence with about 347 manufacturing facilities and 87 product development centres in 28 countries. This allows Magna to infuse itself in local vehicle industries without relying too much on the international supply chain links.
The stock
While not comparable to Tesla, Magna stock experienced a major spike after the pandemic as well and rose about 235% in a little over a year. But the company has already entered the correction phase, and the stock has fallen down just enough to make the valuation fair and push the yield to a relatively higher number (2.2%).
Magna, while not an EV producer, is equipped with the right tools and has the right vision about the future of the automobile industry. It’s already working on solutions for EV vehicles and might be able to ride the momentum created by the green evolution of its industry.
Foolish takeaway
Magna offers more than just a healthy combination of growth and dividends. It offers you exposure to the automobile industry that’s going through a change expected to last for a decade. This change will trigger a lot of moving parts, and many of them would be Magna’s, which might push the company stock steadily higher. It’s one TSX alternative growth stock to Tesla that should be on your radar.
