If you are contemplating investing in an automotive stock right now, it's imperative to understand the industry's changes. The shift from fossil fuel vehicles to EVs means new production lines, a different supply chain, different skill sets, and various other major changes for vehicle manufacturers. This also means a massive shift for other businesses in this industry.

Some may have the right focus and lean build to easily survive or even thrive in this transformation, while others might be a bit risky. This may also reflect in their stocks, now or in the next few years. In Canada, Magna International (TSX:MG) is the only large-cap stock in this category, and considering its diversified services, it may be a decent buy in this transformative phase.

The company

Magna International is technically an automotive parts manufacturer, though the company also builds complete vehicles and has manufactured at least four million complete units so far. Most of them are for other names and don't carry the Magna badge, so most customers are unaware of Magna's status as a vehicle manufacturer.

But Magna's other services and products give it an edge. The company already builds chassis and other body parts and added battery enclosures to its portfolio, tapping into the EV market. It has already made powertrains and individual segments of EV vehicle drive systems.

The company is also at the edge of innovation regarding intelligent vehicle systems and even equipment for automated vehicles like radars, cameras, and sensing systems.

This product line and innovative business approach reflect a company that is ready to evolve and keep pace with major industrial transformations.

Is Magna stock a good buy?

Magna stock is in two conflicting states right now. It's heavily discounted – trading at a 51% discount from its five-year peak – and has been in a modest bull market phase since early September. It has increased about 16% since then, though the trajectory hasn't been straight. The 11.3 price-to-earnings also makes it an attractive pick from a value perspective.

The recent financial results of the company were not very encouraging, because even though it did increase its free cash flow, net income and net income and adjusted equity per share (EPS) slumped (not too hard though). A famous former hedge-fund manager even explicitly warned against buying this stock.

But it's also challenging to ignore the good side. In addition to the valuation and current bullish trend, the company has a decent amount of cash on hand and enough liquidity to absorb weak sales cycles. The dividends are backed by a solid payout ratio and are pretty attractive at a yield of 4.3%.

It may not be a very obvious pick but compared to other options from the industry, Magna International is a decent buy.

Foolish takeaway

It might be smart to keep an eye on the stock instead of buying right away and see how the next quarter's results and changing trends in the industry influence the stock's performance. A major shift in the stock's value or a clear upward or downward trend might make it easy for you to make the right choice regarding this stock.