Paul Harris, CFAAutoCanada Inc.ACQ.TOPAST TOP PICKAug 30, 2018

Our PAST TOP PICK with ACQ has triggered its stop at $23.  To remain disciplined, we recommend covering the position at this time.  This will result in a net investment gain of 16%, when combined with our previous recommendations.  

Our PAST TOP PICK with ACQ is progressing well.  To remain disciplined, we recommend trailing up the stop (from $21) to $23 at this time.  

ACQ, who holds 65 auto locations and has over 15,000 vehicles in inventory, is reiterated as a TOP PICK.  Recently reported earnings showed a 30% increase in EPS.  Cash reserves are being prudently used to aggressively retire debt.  It trades at 7x earnings, 1.2x book and supports a 21% ROE.  We continue to recommend a stop at $21, looking to achieve $31 -- upside potential of 24%.  Yield 0%   

Our PAST TOP PICK with ACQ has achieved its target at $26.  To remain disciplined, we recommend covering half the position at this time and trailing up the stop (from $17) to $21.  

With a network of 65 auto dealerships in North America, we reiterate ACQ as a TOP PICK.  It trades at 7x earnings, supports a 17% ROE and is right at book value.  Cash reserves are growing, while the company aggressively retires debt and buys back shares.  We recommend trailing up the stop (from $15) to $17, looking to achieve $26 -- upside potential of 23%.  Yield 0% 

We reiterate ACQ as a TOP PICK.  Strong consumer demand and constraints on light vehicle supply have combined to create record industry profitability in the auto dealership sector.  Higher interest rates have taken away some of the momentum, but the company recently reported higher cash reserves, while they aggressively retired debt and bought back shares.  It trades under book value and 7x earnings.  We continue to recommend a stop-loss at $15, looking to achieve $26 -- upside potential of 31%.  Yield 0%

We reiterate this operator of auto dealership franchises as a TOP PICK.  It trades at 7x earnings and under book value.  It supports a ROE of 19%.  Cash reserves are growing while debt is aggressively retired and shares bought back.  We recommend trailing up the stop (from $13) to $15, looking to achieve $26 -- upside potential of 40%.  Yield 0% 

ACQ operates 85 auto dealerships in Canada and also in Illinois.  They also operate service and repair centres, which processed 900,000 orders in 2022.  Recently reported earnings showed an almost doubling of net income.  It trades at 7x earnings, 1.1x book value and supports an 18% ROE.  Cash reserves were steady, despite aggressively retiring debt and buying back stock.  We recommend a stop-loss at $13, looking to achieve $30 -- upside over 75%.  Yield 0%