LINAMAR CORP. $41 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 64.7 million; Market cap: $2.7 billion; Price-to-sales ratio: 0.8; Dividend yield: 0.8%; TSINetwork Rating: Extra Risk; www.linamar.com) gets 80% of its revenue by making engines, transmissions and other precisionmachined parts for automakers. The company has plants in North America, Europe and Asia.
The remaining 20% of Linamar’s revenue comes from its self-propelled, scissor-type elevating work platforms, which it sells under the Skyjack name, plus consumer products, such as lawn mowers and cargo trailers.
Thanks to rising car demand, the company continues to win new orders from automakers. Rising construction activity has also prompted contractors to order more Skyjack platforms, particularly in fast-growing markets like Brazil.
In the three months ended September 30, 2013, Linamar’s revenue rose 15.5%, to $893.3 million from $773.4 million a year earlier. Sales of transmissions and other auto parts rose 14.0%, while industrial equipment sales gained 25.1%.
The company’s earnings jumped 54.3%, to $52.0 million, or $0.80 a share, from $33.7 million, or $0.52. In addition to the higher revenue, Linamar’s profits benefited from lower operating costs resulting from its recent productivity improvements. It also spent less to start production of new transmissions and other auto parts.
Linamar’s long-term debt of $655.6 million is a moderate 24% of its market cap. It also holds cash of $117.4 million, or $1.81 a share.
The company should earn $3.20 a share in 2013, and the stock trades at a reasonable 12.8 times that forecast. The $0.32 dividend yields 0.8%.
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