With the climate change crisis worsening each year, governments worldwide are actively shifting to greener alternatives to fossil fuels. From increasing a focus on renewable energy to cleaner and greener electric vehicles (EVs). With EVs becoming increasingly popular, several auto manufacturers have entered this space in the last few years. Among them is Canada-based Manga International (TSX:MG).
Investors who want to take advantage of the green revolution in the automotive industry can look to stocks operating in the EV space for potentially substantial long-term wealth growth.
Operational since 1957, Magna International is now primarily a global original equipment manufacturer for light trucks and vehicles. The company has four segments, namely Power and Vision, Body Exteriors, Seating Systems, and Structures and Complete Vehicles.
Headquartered in Aurora, Ontario, the $20.17 billion market capitalization stock can be a major player in the EV industry’s future. Let’s take a look at the stock to determine why it might be a great investment.
A change in full-year earnings projection
Magna International reported on May 5, 2023, that it has changed its full-year earnings forecast for fiscal 2023. As supply chain issues continue subsiding, EV production in North America and Europe can ramp up in the next few months. With more EVs being produced, Magna International can make more sales.
This news comes on top of already promising results in the first quarter (Q1) of fiscal 2023. The EV stock reported an increase in sales from US$9.64 billion in Q1 last year to US$10.67 billion in Q1 2023. The 3% uptick in light vehicle production worldwide led to this growth in Magna International’s sales.
A new partnership in Europe
Besides positive earnings results and an improved full-year forecast, Magna International also announced a successful partnership agreement with European Global Premium, an Original Equipment Manufacturer (OEM) based in Europe. The high-volume contract Magna International secured will involve the supply of a new eDrive system (eDS Mid).
The new eDS Mid parts production is anticipated to start by 2026, with deliveries expected to begin in 2027. The deal is a major milestone for the EV parts manufacturer. It will allow Magna International to continue providing innovative tech-based solutions for the EV industry for years to come.
Another notable milestone
Late in April, Magna announced the successful completion of half-a-million Mercedes G-Class vehicles through its Graz facility. The positive news exemplifies its successful long-term partnership with the luxury auto manufacturer. For the last 44 years, Magna International has been building this vehicle for Mercedes-Benz, cementing its place as a top contract manufacturer for the German auto giant.
Foolish takeaway
As of this writing, Magna International stock trades for $70.71 per share, down by almost 23% from its 52-week high. Despite the downturn, its future prospects make it an attractive investment to consider. Magna International is also a reputable Canadian Dividend Aristocrat, boasting a 13-year dividend-growth streak. Currently, it pays its shareholders at a 3.51% dividend yield.
If you are looking for investments you can buy and hold for the long run to leverage capital gains and consistently growing dividend income, Magna International stock is worth having on your radar right now.
