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Compiling comments that experts make about stocks while on public TV.

2017-02-28

Opinion for Grande West Transportation Group (BUS-X)

Signal Price Bias Subject Owned
TOP PICK $2.400 UNKNOWN NORTH AMERICAN - SMALL Yes

They make smaller buses, relative to New Flyer (NFI-T). It will probably be his “go to” name over the next couple of years. Thinks they are at an inflection point where they have over 240 buses in backlog. Have just started to ramp up in terms of production, and thinks Q1 will be a good quarter. Has a huge advantage over everybody else. It is more cost efficient for people to buy these buses, because if you look at the 40 foot buses that are out there, they are driving around fairly empty after peak hours. The US is spending a lot more money in this area in terms of municipalities. Probably going to earn $.10 this year, and maybe $.15 in 2018, and will probably trade at around 14X next year’s earnings, but earnings are going to be extremely strong. (Analysts’ price target is $2.25.)

Peter Imhof
Vice President & Portfolio Manager, AGF Investments Inc

2 Comments

mountainpose

March 1st 2017 at 1:12pm

Perhaps the following should also be considered. The future of Buses is electric.

With 2017 comes the beginning of a new presidential administration. Since the federal government is responsible for a large portion of transit bus funding in the U.S., any change can potentially impact the stability of funding for future transportation needs. The good news for public transit is that the 2014 FAST Act provides significant annual funding for transportation programs through 2020.
Specifically, the FAST Act enables ongoing and increased funding for transit buses (§§ 5307, 5311 and 5339(a)) as well as $55 million of Low/No discretionary grant funding (§ 5339(b)), which can be applied toward the purchase of public transit vehicles with low or no emissions. In total, $275 million in funding for zero-emission buses was made available from 2016 through 2020. Since 2015, customers have qualified for approximately two-thirds of Low/No money awarded for battery-electric buses. Expect a new $55 million 2017 Low/No solicitation to come out in the coming months.
Given that the FAST Act was passed by a Republican-controlled congress, this would imply a relatively small risk for funding to be nullified or amended. It is possible, however, that some of the increased funding in FAST Act may be delayed if congress passes continuing resolutions with funding based on 2016 fiscal levels.
In light of this, several states and cities, including California, Chicago and New York, all continue to offer voucher programs, ranging from $95,000 to $150,000, per bus, to purchase Proterra vehicles. Additionally, every state is eligible to receive funding associated with the $15 billion settlement associated with Volkswagen Group’s diesel car emission scandal. Of this, $2.7 billion will go towards helping fund NOx mitigation projects. Funding will be available for use by Q1 2018, if not sooner. To influence the allocation of the VW funding and ensure it is applied to public transit zero-emission solutions, we urge you to send a letter to your governor to take urgent action now.
Complementing federal, state and local municipal funding available for electric buses, Proterra has developed several financing options—reducing up front out-of-pocket costs.
MUNICIPAL CAPITAL LEASE
Capital leases are generally a low-cost financing tool for local governments with investment-grade credits. They offer structured ownership that enables customers to own a bus at the end of the lease term. Traditional federal match funding can be used to help pay for capital lease payments.
OPERATING LEASE
Operating leases allow customers to pay for the use of a bus over time, with the option to permanently transition the bus into a fleet at the end of the lease term. The combined annual fuel, maintenance and operating lease costs can be structured to be less than the same combined operating costs of a leased fossil fuel vehicle. JLL, a major commercial real estate services company, recently entered into an operating lease for 10 Proterra buses that provide service to tenants at the Aon Center and Prudential Plaza buildings in Chicago.
BATTERY LEASE
A battery lease enables our customers to purchase a Catalyst vehicle for roughly the same price as a diesel bus, putting the operating savings toward the battery lease. Proterra is responsible for the performance of the batteries through the life of the lease, removing operator risk. FAST Act and the 2016 Low/No grant language specifically mention the ability to finance batteries separately from the bus. Park City, Utah recently entered into a battery service agreement for a fleet of six Proterra buses that will be funded from their 2016 Low/No grant.
Finally, Proterra has produced a fleet of “rental” buses available for short periods of time (three to 12 months), so interested customers can test Proterra buses in their fleet prior to committing to a long-term purchase.
The future has never been brighter for the transit bus market. Smart companies work with customers to identify the grant, loan or financing program to meet budgetary requirements. Together they identify the right combination of financing tools that map to customer procurement plans, ensuring a seamless transition to a zero-emission fleet.
The largest manufacturer is protera and boy are they wellbacked.

FYI https://www.proterra.com/

barney11

March 5th 2017 at 12:34am

Thank you for the input (again) Mountainpose. I did go in but did sell too early and thinking of returning to the fold. You do not help my decision making process by throwing the Proterra electric buses into the pot. They are going to be stiff competition. What bothers me is why S&P continues to rate this company a Strong Sell while Morningstar gives it three stars and a $3.00 fair value. Who says investing is easy. I have always found Morningstar more conservative than S&P so I guess I answer my own question.


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