Stocks were looking to add to yesterday’s gains this morning in early trading. The Dow shot up nearly 600 points in yesterday’s session for it’s best day since March. Thanks to yesterday’s comeback the S&P 500 is now less than 1% away from its record high.
We’ll see if positive sentiment will hold through Fed Chairman J. Powell’s testimony before the House of Representatives. The Fed Chair is expected to testify on the central bank’s response to the pandemic at 2pm this afternoon.
Our trade alert for today highlights a company that’s making waves in the EV market in the U.S. and also in the largest EV market in the world – China. So if you’re looking to capitalize on the rosy EV market prospects with a not-so-traditional option, read on.
Ontario-based auto component producer Magna International Inc. (MGA) is making considerable strides in revving up vehicle electrification capabilities. To demonstrate its EV prowess, the company has two newly released advanced electrified propulsion systems with enhanced range, improved drive dynamics and lower emissions by 38%.
The company has just seen earnings accelerate for a third straight quarter. They also raised guidance for the rest of 2021 as it sees stronger China sales on the horizon. But the U.S. still remains Magna’s largest market and there is plenty happening closer to home.
The company is set to benefit as Legacy automakers like Ford (F) and General Motors (GM) are committing to heavy EV spending. To meet growing demand, Magna says it will invest $70 million over the next five years to construct an EV battery-component plant in Michigan. Production at the state of the art facility is set to commence in early 2022 with battery enclosures for General Motors’ new GMC Hummer EV.
Meanwhile, there are whispers in the pipeline that the long-rumored EV from Apple (APPL) may come to life with the help of Magna. In April, The Korea Times said LG Electronics and Magna were “very near” to signing a deal with Apple to build its initial electric cars. There hasn’t been confirmation on that, but the prospect is pretty exciting.
Magna share price has lost nearly 6% in the past month due to near-term challenges amid supply issues and rising prices for key manufacturing materials. Current conditions may put pressure on gross margins in the near-term. But these hiccups shouldn’t diminish your faith in the stock. In fact, this may be a great opportunity to buy the dip.
Of 20 polled analysts 14 rate the stock a Buy, 5 say Hold and only one calls MGA a Sell. The median price target of $113.50 implies a 23.75% increase over the next 12 months.
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