Magna International (TSX:MG) is an Aurora-based company that is engaged in the design, engineering, and manufacture of components, assemblies, systems, subsystems, and modules for original equipment manufacturers of vehicles and light trucks around the world.
Today, I want to explore where we would stand if we made a $10,000 investment in Magna stock all the way back in 2010. Beyond that, I want to discuss the trajectory of the auto parts market and look at the company’s future. Let’s dive in.
How has this auto stock performed over the past year?
Shares of Magna stock have increased 7.4% month over month as of close on Tuesday, July 11. However, the stock is still down 1.2% so far in 2023. Its shares have climbed 5.1% year over year at the time of this writing. Investors can see more of its recent and past performance with the interactive price chart below.
Here’s why I’m excited about Magna as it moves into the electric vehicle space
This company has long established itself as one of the premier auto parts manufacturers in North America and around the world. Back in 2022, Magna laid out plans to expand its parts manufacturing into the electric vehicle (EV) space. That is good news for the company and shareholders. Precedence Research recently valued the global EV parts and components market at US$168 billion in 2022. The same report forecasted this market to reach US$508 billion by 2030. That would represent a compound annual growth rate (CAGR) of 14% over the projected period.
In February 2023, Magna announced that it would invest $470 million to expand its operations across Ontario. This will include a new battery enclosures facility in Brampton that will support the electric Ford F-150 Lightning. Moreover, the company won a contract to manufacture the new INEOS Automotive electric off-road vehicle. Indeed, Magna’s strides in the EV space are worth getting excited about.
Should investors be happy with the company’s recent earnings?
Magna International released its first-quarter fiscal 2023 earnings on May 5. The company delivered sales growth of 11% to $10.7 billion. Meanwhile, global light vehicle production increased 3% compared to the previous year.
EBIT stands for earnings before interest and taxes. This company last reported an adjusted EBIT of $437 million in the first quarter of fiscal 2023 — down from $507 million in the first quarter of fiscal 2022. Adjusted diluted earnings per share (EPS) also dropped to $1.11 compared to $1.28 in the previous year.
Looking ahead, Magna boosted its financial guidance and now expects total sales between $40.2 billion and $41.8 billion for the full year. Moreover, it projects an adjusted EBIT margin between 4.7% and 5.1%.
Why a $10,000 investment in Magna would make you smile in 2023
Shares of Magna stock closed at $17.74 per share on July 12, 2010. At the time, we could snatch up 563 shares of this stock for a purchase price of $9,987.62. Magna stock closed at $77.63 per share on Tuesday, July 11. Those same 563 shares would be worth $43,705.69 at the time of this writing. That means investors in this top auto parts stock would have gobbled up capital gains of over $33,000 in fewer than 15 years.
