When markets get rocky, worth buyers begin paying consideration. Panic promoting typically brings down high quality shares, opening a window to select up stable companies at discounted costs. That’s the present setup for Magna Worldwide (TSX:MG) and BRP (TSX:DOO). Each worth shares are going through short-term headwinds, however the long-term potential remains to be very a lot intact. And with share costs effectively off their highs, now could be a wise time to behave.
Magna
Magna is without doubt one of the world’s largest auto components suppliers. It has operations throughout North America, Europe, and Asia. It builds every little thing from physique buildings and powertrains to superior driver-assist techniques. And it provides just about each main automobile firm on the planet. However like the remainder of the auto trade, Magna has been hit by a wave of challenges, together with provide chain points, electrical automobile (EV) slowdowns, and basic financial uncertainty.
In its newest quarterly earnings report, Magna posted first-quarter (Q1) 2025 gross sales of US$10.1 billion, an 8% lower from final yr. Adjusted earnings per share (EPS) got here in at US$0.78, down from US$1.08 a yr in the past. Administration pointed to elevated engineering prices and lower-than-expected manufacturing volumes as causes for the drop. Nonetheless, the outcomes nonetheless led to a rise in its 2025 outlook, concentrating on gross sales between US$40 billion and US$41.6 billion for the yr.
This reveals that Magna’s points are extra cyclical than structural. The worth inventory has a robust stability sheet, deep buyer relationships, and is investing closely in EV and autonomous automobile tech. In different phrases, it’s nonetheless very a lot within the sport. With the inventory buying and selling at 10.5 instances ahead earnings and providing a 5% dividend yield, worth hunters ought to take observe. If auto manufacturing picks up, and it normally does as soon as provide chains normalize, Magna may rebound properly.
BRP
Now, let’s speak about BRP, the maker of Ski-Doos, Sea-Doos, and Can-Am off-road automobiles. It’s a favorite for powersports followers, and for years, it’s been a Canadian success story. However currently, the worth inventory has taken a beating. Shares are down sharply from their 2021 highs, and in Q1 fiscal 2025, BRP reported a 16.4% drop in income to $2.031 billion. Normalized earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) fell 34.4% to $247.2 million, whereas web earnings plunged to a lack of $7.4 million.
The larger image is that BRP is grappling with weak shopper demand and elevated promotional spending. North American retail gross sales have been flat in comparison with final yr, with a drop in year-round product gross sales offset by sturdy snowmobile outcomes. However the worth inventory is proactively managing by the downturn. It’s clearing extra stock, trimming prices, and doubling down on its core energy sports activities enterprise. The latest resolution to promote its marine division is a part of this strategic shift.
The excellent news? BRP remains to be worthwhile, producing sturdy money movement and paying out a quarterly dividend of $0.86 yearly. That’s a 1.3% dividend yield, nothing enormous, however backed by a resilient enterprise. The long-term outlook stays promising, particularly if financial circumstances enhance and customers return to spending on leisure merchandise. With the worth inventory buying and selling at a low valuation relative to its historic averages, the upside could possibly be significant.
Backside line
Each Magna and BRP are undoubtedly going through challenges. However these are the sorts of setups worth buyers like: sturdy worth shares going by momentary tough patches. Traders who’re affected person and may abdomen a little bit of volatility could be rewarded down the street. These aren’t “get-rich-quick” shares. However for long-term portfolios, they appear like well-priced constructing blocks. If everybody else is panicking, staying calm and shopping for worth could possibly be the sensible transfer. Magna and BRP aren’t excellent, however they’re constructed to final. And as we speak, these can be found at a steep low cost.