This Growth Stock is Down 9%: Buy, Sell, or Hold?

This growth stock has climbed rapidly, and is up 12% after earnings! Yet there is still room to run according to the company’s outlook.

| More on:
Dice engraved with the words buy and sell

Image source: Getty Images.

Shares of Linamar (TSX:LNR) shot up last week as the machinery producer produced earnings that far outweighed analyst estimates. Linamar stock saw shares rise as much as 12% after the news hit, and yet, there is still room to grow.

Linamar stock hit its 52-week highs earlier this year, with shares at about $79. At $71 as of writing, this puts it in the position to see even more massive growth in the near future. So, here’s what investors should consider before they buy, sell, or indeed just hold the stock.


It’s pretty clear why investors might want to consider buying Linamar stock after earnings caused shares to rise. The company reported strong financial performance in the fourth quarter, as well as the full-year for 2023. Sales, operating earnings, and diluted earnings per share (EPS) all saw significant growth. Both mobility and industrial segments did well, with a surge in earnings for industrial segments from market share gains and acquisitions.

Earnings were up 18% year over year to $503.1 million, and the company is looking to outperform in 2024. What’s more, the stock returned cash to shareholders through a record quarterly dividend increase, with even more growth expected for 2024.

Growth has been impressive, with much attributed to strong sales in both of their business segments. The company now believes there will be continued double-digit growth in both top and bottom lines for 2024. So, undoubtedly, with a higher dividend and more growth to come, there is an argument to buy.


Yet there is also a reason to sell. The future outlook isn’t for sure, but what is for sure is the share price you could sell at right now if you own the stock. Plus, Linamar stock is heavily reliant on the auto industry, which is a cyclical market. This area tends to therefore see booms and busts, and a downturn could hurt the stock.

What’s more, there is a shift to electric vehicles (EV), which could be a challenge for Linamar, which focuses on gasoline-powered vehicles. And there is a lot of competition even if Linamar decides to expand into the EV sector.

So while more growth is predicted, it’s not for certain. Indeed there could be a market correction after the stock has climbed so high. So if you’re looking to perhaps take out returns you need right now, it could be the time.


Yet above all, if you’re unsure, I would keep holding Linamar stock if you already have it. The company has proven time and again over the last few quarters that it can beat out analyst estimates. There is also positive momentum both year over year as well as quarter over quarter, providing guidance that matches performance.

The stock also has an advantage from being diversified in both mobility and industrial segments. So it can certainly capitalize on these opportunities in the future. Plus, the stock might get into EV after all! And this could provide it with even more growth.

Plus there’s that dividend to consider, that’s now risen to $0.25 per share on a quarterly basis. That, of course, is $1 per share annually, or 1.4% as of writing. So if anything, I would continue to wait and see for Linamar stock. It may just be warming up.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Linamar. The Motley Fool has a disclosure policy.

More on Dividend Stocks

hand using ATM
Dividend Stocks

Should Bank of Nova Scotia or Enbridge Stock Be on Your Buy List Today?

These TSX dividend stocks trade way below their 2022 highs. Is one now undervalued?

Read more »

A meter measures energy use.
Dividend Stocks

Here’s Why Canadian Utilities Is a No-Brainer Dividend Stock

Canadian Utilities stock is down 23% in the last year. Even if it wasn’t down, it is a dividend stock…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

Got $5,000? Buy and Hold These 3 Value Stocks for Years

These essential and valuable value stocks are the perfect addition to any portfolio, especially if you have $5,000 you want…

Read more »

Growing plant shoots on coins
Dividend Stocks

3 Magnificent Ultra-High-Yield Dividend Stocks That Are Screaming Buys in April

High yield stocks like BCE (TSX:BCE) can add a lot of income to your portfolio.

Read more »

grow money, wealth build
Dividend Stocks

1 Growth Stock Down 24% to Buy Right Now

With this impressive growth stock trading more than 20% off its high, it's the perfect stock to buy right now…

Read more »

Dividend Stocks

What Should Investors Watch in Aecon Stock’s Earnings Report?

Aecon (TSX:ARE) stock has earnings coming out this week, and after disappointing fourth-quarter results, this is what investors should watch.

Read more »

Freight Train
Dividend Stocks

CNR Stock: Can the Top Stock Keep it Up?

CNR (TSX:CNR) stock has had a pretty crazy last few years, but after a strong fourth quarter, can the top…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

3 Stocks Ready for Dividend Hikes in 2024

These top TSX dividend stocks should boost their distributions this year.

Read more »