I added more shares of Magna International (NYSE:MGA) stock today. This marks the third stock purchase I’ve made this week. Earlier in the week I bought more shares of AT&T and Wells Fargo Bank. I guess my stock buying dry spell is finally over. Markets have been more volatile the past 2-weeks, which has created a little more opportunity than I’ve seen the past few months. I still believe a major correction is around the corner, probably sometime in Q1 of 2017.
Until the next market correction, my primary focus will be to sell cash secured puts and covered calls. I’ll also be buying a few value stocks, and adding to some of my existing positions. The goal is to have at least 100 shares of each stock.
I first invested in Magna International last December. My last Magna post covered company dividends, payout ratio and stock valuation. Not much has changed since then.
This post is more about Magna the company, focusing on operations, customer base and growth prospects.
In December, I bought 35 shares of Magna International, at $41.72 per share, totaling $1,470. Today I bought 65 shares of Magna International, at $39.58, totaling $ 2,572. My new cost basis per share is $39.36. You might be asking how my overall cost basis is lower than either of my stock purchase prices. Is this fishy to you? It’s legit. I sold one Magna International put on 7/6 and bought the put back on 7/22. My income from this option was $90.58. This dollar amount is reduced from my cost basis, which explains my $39.36 per share cost basis.
These 65 new shares of Magna International will add $65 to my annual dividends.
Magna Interational Overview
Magna International Inc. (Magna) is an automotive supplier. The Company’s segments are North America, Europe, Asia, Rest of World, and Corporate and Other. Its product capabilities include producing body, chassis, exterior, seating, power-train, electronic, vision, closure, and roof systems and modules, as well as vehicle engineering and contract manufacturing. The Company’s operating unit, Cosma International, is an automotive supplier that provides a range of body, chassis and engineering solutions. The Company produces a range of body-in-white solutions Source: www.schwab.com.
Magna International Customers
Magna International has 82 large customers which are split into four sections: OEM, Tier 1, Medium-Heavy Truck, and Non-Automotive.
Magna OEM Customers
Source: Magna International – Global Reach
Magna Tier 1 Customers
Source: Magna International – Global Reach
Magna Medium-Heavy Truck Customers
Source: Magna International – Global Reach
Magna Non-Automotive Customers
Source: Magna International – Global Reach
The Global Reach of Magna International
Magna operates in four continents and 29 countries. This global reach makes it possible for Magna to service every major automaker in the world. Today, Magna has 309 manufacturing facilities, and 99 product development, engineering and sales centers.
The map below shows Magna’s penetration by continent. Over the past 20 years Magna has focused on building up its operations in emerging markets, such as Russia, India and China.
Source: Magna International Facts and Figures
North America
Magna’s global headquarters is located in Ontario Canada. Magna has 155 facilities and over 72,000 employees throughout Canada, Mexico and the United States.
South America
In Argentina and Brazil, Magna has 14 manufacturing plants, 2 product development, engineering and sales facilities, and more than 3,500 employees.
Europe
Magna operates 160 facilities spread throughout Ireland, England, Italy, France, Spain, Turkey, Russia, Sweden, Germany, Poland, Austria, The Czech Republic, Hungary, The Slovak Republic, Serbia, Bulgaria, and Romania. Magna employs over 55,000 employees throughout these countries. Magna also has a complete vehicle engineering and assembly operation in Austria.
Asia Pacific
Magna employs almost 21,000 people at 49 manufacturing locations and 25 product development, engineering and sales offices. Magna operates in China, India, Thailand, Taiwan, South Korea, and Japan.
Magna International Capabilities
Magna is a full service automotive provider, capable of building entire vehicles. Customers use Magna for various reasons, some just want seats, while others have entire vehicles manufactured by Magna. The image below shows the nine major capabilities of Magna International. Each section has multiple product lines within.
Source: Magna International Capabilities
Conclusion
Manga is a global company, with operations in all key automotive manufacturing centers of the world. With a strong market presence and years of experience in this space, Magna is a premier provider of automotive components. As long as cars and trucks are being manufactured, I’m comfortable owning this stock. Magna is subject to economic conditions. As an automotive supplier, Manga’s performance struggles when auto sales slump.
Magna offers a dividend yield of 2.51% with a modest payout ratio of 18.47% . Magna boast a very impressive Dividend Coverage Ratio of 541%.
What do you think on Magna International? Do you buy stocks in the automotive space or avoid them?
Full Disclosure: Long MGA