Linamar added as Strong Buy November 27, 2016

Linamar is added to our list as a Strong Buy at $51.09.

With very strong recent earnings growth and a P/E of 6.7 the numbers suggest this is a strong Buy. This 6.7 seems particularly low given the U.S. stock markets are at a record high with average P/E closer to 20. However, this is my first look at an auto parts company and I do not claim any ability to predict auto sales. This is a somewhat cyclic company in terms of earnings and a HIGHLY cyclic company in terms of the share price. I am also not familiar with its long term history. “The market” apparently believes that its earnings growth is about to stall out and that earnings will be lower in 2017 than in 2016. Based on the numbers, I intend to buy shares Monday morning. Given that it is cyclical, perhaps one has to be prepared to hold for the long term and/or to add to the position on dips.