LINAMAR CORP. $82 (Toronto symbol LNR; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 65.1 million; Market cap: $5.3 billion; Price-to-sales ratio: 1.3; Yield: 0.5%; TSINetwork Rating: Average; www.linamar.com) rose to an all-time high of $84.13 after reporting record first-quarter results.
In the three months ended March 31, 2015, sales rose 22.5%, to $1.3 billion from $1.0 billion a year earlier. That’s partly because Linamar recently bought hot-forging businesses in the U.S. and Germany for $107.6 million.
These operations bring expertise that will improve the company’s ability to make specialized parts. That will make its transmissions lighter and quieter, with less vibration.
Meantime, strong car sales are spurring demand for Linamar’s automotive equipment. As a result, sales at its powertrain division (83% of overall sales) rose 23.2%. Sales of its industrial products (17%), including its Skyjack scissor-type elevating work platforms, gained 19.5%.
Earnings jumped 42.3%, to $1.75 a share from $1.23. The higher sales and improving productivity lifted the company’s net profit margin (net profits as a percentage of sales) to 8.9% from 7.6%.
The stock has gained 35% in the past year, but it still trades at a moderate 13.3 times the $6.15 a share Linamar will likely earn in 2015. The $0.40 dividend yields 0.5%.
Linamar is a buy.
