TSX stocks to watch as motor vehicle sales jump 27.4% YoY in June

Highlights

• Sales of motor vehicles, including parts and accessories, reached C$ 12.2 billion in June.
• Uni-Select posted a net income of US$ 22.78 million in Q2 2022.
• AutoCanada said its top line grew by 31.6 per cent to C$ 1.68 billion in Q2 2022.

Investors seeking significant growth can explore Canadian automobile stocks like Magna (TSX: MG), Uni-Select (TSX: UNS), Martinrea (TSX: MRE) etc., to capitalize on gains from the automobile industry.

Statistics Canada recently revealed that wholesale sales slightly increased (up by 0.1 per cent) in June, with sales of motor vehicles, including parts and accessories, reaching C$ 12.2 billion, up by 3.1 per cent from May. According to the latest wholesale trade report, this increase came as the motor vehicles industry saw a sales growth of 5.3 per cent to C$ 9.6 billion.

Notably, the StatsCan report revealed that motor vehicle sales were up by 27.4 per cent year-over-year in June. Keeping these latest numbers in mind, Kalkine Media® presents some Canadian automobile stocks that one can explore.

1.     Magna International Inc (TSX: MG)

Magna International is currently among the top consumer goods stocks based on the largest price gains in the last 30 days, according to the TMX site.

The Canadian auto parts supplier reported sales of US$ 9.36 billion in Q2 2022, increasing by four per cent year-over-year (YoY). This sales growth was primarily driven by global light vehicle production, which increased by two per cent and strengthened by 14 per cent growth in North America. Magna’s Board of Directors approved a quarterly dividend of US$ 0.45, timed to be delivered on August 26.

The MG stock gained nearly 18 per cent quarter-to-date (QTD). On August 15, Magna stock had a Relative Strength Index (RSI) value of 61.62 (pointing to a medium-to-high momentum), as per Refinitiv information.

2.     AutoCanada Inc (TSX: ACQ)

AutoCanada recently revealed acquiring Kelleher Ford to expand its presence in western Manitoba. Kelleher is a new and used vehicles Ford dealership, including a collision centre, situated in Brandon with operational history of over 25 years. AutoCanada highlighted that this acquisition marks its second Ford dealership and generates annual revenue exceeding C$ 50 million.

AutoCanada said its top line grew by 31.6 per cent YoY to C$ 1.68 billion in the second quarter of 2022. The auto company also saw its net profit increase by 3.6 per cent YoY to C$ 39.05 million in the latest quarter.

The ACQ stock jumped by about nine per cent in one month. According to Refinitiv data, this small-cap stock appears to be gaining momentum on August 15, with an RSI value of 61.13.

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3.     Uni-Select Inc (TSX: UNS)

Uni-Select saw its total revenue at US$ 444.3 million in Q2 2022, representing an increase of US$ 27.9 million compared to Q2 2021. With organic growth of 10.8 per cent, the small-cap automotive product distributor reported a positive organic surge across the three segments: FinishMaster, Canadian Automotive Group, and GSF Car Parts.

Uni-Select posted a net income of US$ 22.78 million in the latest quarter, reflecting a significant rise of 212.5 per cent from Q2 2021. Free cash flow (FCF) also reached US$ 43.06 million in the second quarter this year, five per cent up from Q2 2021.

The UNS stock galloped by almost 116 per cent in 12 months. Refinitiv data suggest UNC scrips be on an uptrend as its RSI was 68.39 on August 15, nearing the overbought level of 70.

4.     Exco Technologies Limited (TSX: XTC)

Exco Technologies posted C$ 129.25 million in sales in the third quarter ended on June 30, 2022, compared to C$ 114.96 million in the same period a year ago. Exco announced a quarterly dividend of C$ 0.105, and it is expected to be paid on September 30. 

The XTC stock zoomed by over 13 per cent in one month. According to Refinitiv findings, Exco stock possessed an RSI value of 65.25 on August 15.

5.     Lion Electric Company (TSX: LEV)

Lion Electric delivered 105 vehicles in total in Q2 2022, reflecting additional delivery of 44 vehicles compared to the second quarter of last year.

The Canadian electric vehicle maker reported revenue of US$ 29.52 million in the second quarter this year, notably higher than US$ 16.68 million in Q2 2021. Lion Electric improved on the profitability front as it posted a net income of US$ 37.51 million in Q2 2022 compared to a loss of US$ 178.49 million in Q2 2021.

The LEV stock swelled by roughly 22 per cent QTD. The RSI value of the LEV stock was 52.01 on August 15, as per Refinitiv information.

6.     Linamar Corporation (TSX: LNR)

Linamar is a mid-cap company manufacturing engineered components and systems for electric and traditional vehicle applications.

Linamar posted sales of C$ 1.98 billion in Q2 2022, higher than C$ 1.57 million in Q2 2021. Net profit reduced to C$ 104.5 million in the second quarter this year relative to C$ 108 million in the previous year’s second quarter. However, the mid-cap auto parts maker is set for a quarterly dividend pay-out of C$ 0.2 on September 9.

The LNR stock spiked by almost 29 per cent in three months. Also, Linamar stock seems to be gaining momentum in the market as its RSI reached 68.71 on August 15 (nearing the overbought mark).

7.     Martinrea International Inc (TSX: MRE)

Martinrea International recently announced a quarterly cash dividend of C$ 0.05 to be paid on October 15, stating its financial results for Q2 2022. Martinrea said its total sales amounted to C$ 1.11 billion in the latest quarter, reflecting YoY growth of 25.9 per cent. The small-cap firm saw its net profit rise slightly to C$ 25.47 million in Q2 2022 compared to C$ 23.95 million a year ago.

The MRE stock grew by nearly 36 per cent in one month. As per Refinitiv data, MRE stock had a high RSI value of 79.75 on August 15, which generally signals an overbought market situation for the given stock.

Bottom line

The national data agency said that motor vehicle sales might continue to fluctuate monthly considering manufacturing challenges arising from the current supply chain bottlenecks, especially semiconductors. However, motor vehicles and parts sales, on an annual basis, jumped by 12 per cent in June 2022.

Hence, risk takers looking to unlock long-term gains might consider the TSX automobile stocks.

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.