1 Magnificent Canadian Stock Down 30% to Buy and Hold Forever

Analysts are upgrading this Canadian stock that has spent way too long trending downwards.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published May 5, 2025 9:45 pm EDT

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Magna International (TSX: MG) is no stranger to the spotlight in the Canadian investing world. With operations in more than two dozen countries and deep relationships across the global automotive industry, it’s long been seen as one of Canada’s industrial champions. But over the past year, the Canadian stock has taken a hit. It’s now down around 30% from its recent highs, and investors are asking the obvious question: is this the perfect time to buy and hold?

Looking at numbers

Magna’s first-quarter earnings for 2025 were mixed but also offered hints of long-term strength. The Canadian stock reported US$10.1 billion in sales, which was down 8% year over year. Adjusted diluted earnings per share (EPS) came in at US$0.78, a noticeable decline from the US$1.08 it posted in the same period last year. Management pointed to a 3% dip in global light vehicle production and added costs tied to ongoing geopolitical tensions and tariffs. European and North American operations were especially affected, dragging on overall performance.

However, these aren’t permanent issues. Vehicle production tends to move in cycles, and macroeconomic factors like tariffs can shift quickly with trade negotiations. Importantly, Magna remains highly profitable and continues to produce positive cash flow. In fact, the Canadian stock returned US$187 million to shareholders in the first quarter (Q1) of 2025 through dividends and share buybacks. It also increased its quarterly dividend to US$0.485 per share. That’s a clear signal that management believes in its long-term strength, even as it trims short-term costs to weather the storm.

Analyst optimism

The Canadian stock’s recent drop hasn’t scared off analysts. If anything, it’s catching their attention. One analyst recently maintained a “buy” rating on the stock even after trimming its price target from US$47 to US$44. Now, analysts see the dip as more of a temporary speed bump than a sign of deeper trouble. The consensus among analysts is that Magna has solid fundamentals and is well-positioned to bounce back as global auto production recovers.

One reason for that optimism is Magna’s strong positioning in the transition to electric vehicles (EVs). As legacy automakers shift away from internal combustion engines, companies like Magna, known for supplying everything from powertrains and seating systems to high-tech driver assistance features, stand to benefit. In Q1, Magna noted that over 40% of its US$12.8 billion backlog is tied to zero-emission vehicles. That includes contracts for both battery electric and fuel-cell vehicles. If global EV adoption keeps climbing, Magna could become an even more important supplier across the board.

Showing strength

Magna is also making strategic moves to cut costs and protect margins. With U.S. tariffs putting pressure on pricing, the Canadian stock has begun realigning operations to avoid inefficiencies and reduce exposure. It’s also investing in automation and advanced manufacturing technologies that should improve profitability over time. While these investments can be expensive upfront, they help make Magna a more competitive and agile player in a fast-changing industry.

For investors, the appeal of Magna today lies in its mix of reliability and transformation potential. This isn’t a flashy startup chasing the next tech trend. It’s a proven manufacturer with a global presence, deep ties to automakers, and a commitment to shareholder value. Its dividend yield is currently attractive, and its payout history shows a clear desire to reward long-term investors. When combined with the upside potential of its EV and autonomous vehicle initiatives, the case for a long-term hold becomes clear.

Bottom line

There’s no guarantee when Magna’s stock will rebound. It might take another quarter or two for auto production to fully stabilize or for supply chain costs to normalize. However, at current prices, Canadian stock offers a rare opportunity to pick up a high-quality industrial name while trading at a discount. Investors who are willing to be patient may find that this 30% dip is exactly the opening they were waiting for.