Linamar Corporation 2

I do not own this stock of Linamar Corporation (TSX-LNR). It is not a stock I would want to buy and hold. However, you need to track a number of different stocks with different characteristics in order to find stocks that you do like. The real problem with this stock is that it is the Auto business.

When I look at insider trading, I find $1.1M insider buying, with most buying by CFO and officers of the company. There is no insider selling. There are outstanding options and most insiders have more options than shares. However, there are several insiders which own millions of dollars in shares. Large insider ownership is by CFO and officers and range from $3.4M to $355M in shares.

There are some 47 institutions that own 20% of the shares of this company. Over the past 3 months they have sold just over 3% of their shares.

The 5 year low, median and high Price/Earnings Ratios are 8.26, 11.52 and 16.38. The current P/E Ratio of 8.68 on a stock price of $20.23 shows that the stock price is on the low side.

I get a current Graham price of $27.96. The 10 year low, median and high Price/Graham Price Ratios are 0.60, 0.78 and 1.00. The current P/GP Ratio of 0.72 shows a relatively low stock price.

I get a 10 year Price/Book Value Ratio of 1.20. The current P/B Ratio of 1.36 is some 13% higher. This shows a stock price a little on the high side.

I get a 5 year median dividend yield of 1.59% and the current yield is around the same value at 1.58%. This shows a reasonable stock price.

The results of my stock price tests are a little mixed, but overall the stock price seems reasonable.

When I look at analysts' recommendations, I find only Strong Buy and Buy recommendations. The majority of the recommendations are Buys and the consensus recommendation would be a Buy. Consensus 12 months stock price is $26.30. This consensus stock price implies a Total return of 31.6%, with 30% from capital gain and 1.6% from dividends. Dividends income would represent some 5% of the total return.

Canaccord Genuity Corp is one analyst to give this stock a Buy recommendation. See to see why. The analyst David Tyerman feels the buy recommendation reflects Linamar's stronger growth potential. There is a G&M article called Recovery picks up for auto parts suppliers on theirsite.

Obviously some analysts feel that this is going to grow over the next while. However, to me this company is still in the Auto business and there is a worldwide glut of cars. The world might be heading into another worldwide recession. For me, this would be a risky investment with not much hope of it doing well in dividends for me. Insiders seem optimistic, though.

Linamar Corporation is a diversified global manufacturing company of highly engineered products. It is a world-class designer and diversified manufacturer of precision metallic components and systems for the automotive industry, and mobile industrial markets. Its web site is here Linamar. See my spreadsheet at lnr.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.