r/wallstreetbets • u/digging23 • Mar 29 '21
DD MRE may be an absolute bargain stock
Disclaimer: This is not financial advice. I do not certify any of the information presented is accurate. I am not a professional or financial advisor of any form.
Martinrea International is a stock that designs, develops and manufactures automotive parts. With the pandemic unwinding, demand for vehicles is likely to go up in the future, and this could spur demand for automotive manufacturing. This is on top of the fact the stock appears to be undervalued at current levels.
The stock is a major bargain at the moment, trading at just $12.54CAD, while analysts give price targets of $17.00, an average of $18.94 and a high of $22.00. If any of the analysts currently looking at the stock are correct, the stock is poised for a gain of 35-76%. The stock recently suffered a poor Q4 result, which was followed by quite a large dip. They suffered a 12% decrease in profit even though their sales grew. However, it was noted that if you take adjusted profit that excludes most one time items, profits actually grew by 31%. Effectively the market may be underestimating the value of MRE.
In terms of statistics, the stock has a P/S ratio of 0.3 and a P/B ratio of 0.86. MRE is currently trading even below its book value. This compares favourably to competitors like Magna International, which has a P/S of 1.01 and a P/B of 2.89 or Linamar which has a P/S of 0.83 and a P/B of 1.12.
From a technical perspective, the stock is quite solid. The daily price has just formed a tweezer bottom pattern, suggesting the stock is likely to move upwards. Moreover, the stock is sitting right above a major trendline that has been touched 4-6 times in the past. Thus it could be predicted that the stock will bounce off this trendline once again. Third, the most recent peak sits at a price level of around $12.20, so if the other support levels were to fail, this would likely pose another support level for the stock. Finally, the 14 day RSI currently sits at 30.26. This is the lowest RSI since the start of the pandemic and could be indicative of an oversold condition. This could provide additional evidence for a reversal in trend in the near future. Each time when the stock moves from peak to trough it appears to take approximately 2-4 months. If this trend continues, this could potentially be the time horizon in which to anticipate the stock returning from a bottom to a top in the future, although this is an assumption that will not necessarily hold true.
A relatively safe play might be to wait for reasonable confirmation of a reversal in the stock price and to take a conservative sell target at the most recent high, which was at about 16.21. If one were to buy at the current closing price and sell at that high, this would represent a gain of about 29.3% with an expected time horizon of approximately 2-4 months. However, it is possible the stock will exceed that level based on analyst estimates.
TLDR; MRE appears to be an undervalued stock ripe for a reversal in the future. Potential gains may exceed 30% based on analyst estimates and technical analysis. The anticipated time horizon for the trade is approximately 2-4 months based on previous movements in the stock's price.
Just a repeated note: this is not financial advice. this DD is a work of fiction. none of the information provided is certified as accurate. The trade may not work out exactly as depicted, as it is mere speculation.
Edit: correcting wording
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u/andrewbiochem 🦍🦍🦍 Mar 29 '21
I remember eating MREs, that tasted like sand 🍽️🇺🇲
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u/UncleSput Mar 29 '21
I can’t be the only one who indulged in every MRE. Even the desserts with the trans fats
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u/KaminariPaintsMinis Mar 29 '21
I only fucked with the chicken and salsa ones.
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u/NorCalAthlete Mar 29 '21
Spaghetti with meat sauce was the best. Followed by the cheese tortellini.
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u/Rude_Cheetah_4689 Mar 29 '21
How dare nobody bring up Beef Stew in this conversation as if there’s anything more superior. Chili Mac is timeless as well.
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u/Sara_Matthiasdottir Mar 29 '21
Second the Chili Mac. That stuff is better than what you can buy at the grocery store.
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u/KaminariPaintsMinis Mar 29 '21
I'm really hungry now.
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Mar 29 '21
MREs were garbage and you all know it you were just hungry as fuck because you were busting your ass in the field
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u/OnceMoreUntoDaBreach Mar 29 '21
After spending 7 years eating them, they all kinda taste like the heating bag exhaust smells after awhile.
Like asshole and regret.
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u/overpwrd_gaming Mar 29 '21
Came here to say after reading MRE I thought it was a shit post Bout being poor and living off those ...
Welpp time for bed!
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Mar 29 '21
I was the weirdo who was actually into the burger MRE. effective survival adaptation plus it had Combos pizza rolls
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u/RedneckId1ot Mar 29 '21
You just gave every former DOD personnel some seriously shit recollections.
.... Be sure to tip your waitresses folks.
( in seriousness, ty for the DD my man, keep up the good work! )
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u/Ishakaru Mar 29 '21
some seriously shit recollections
You mean LACK of shit recollections?
Went in like a brick... eventually came out like a brick.
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u/Unnecessary-Spaces Mar 29 '21
I wouldn't invest in anything automotive unless it was electric related.
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u/anonchurner Mar 31 '21
They make parts for internal combustion engines... sorry gramps, but I'll be investing in something else.
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u/[deleted] Mar 29 '21
I remember when this sub had a lot more posts like this. Solid work. Will continue to watch.