Opinions
Greg Dean
Alaris Royalty Corp
AD-T
COMMENT
Aug 02, 2016
$23.260
Stock price when the opinion was issued
Financial Services
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BUY
3-year outlook A big holding and a great company. Their holdings are in the U.S. based on a preferred equity structure, but risks lie on the companies' revenues shrinking. They had a little bit of a miss in 2017-8, but it's recovered there. Their companies are performing better. The dividend is 7.2% which he thinks is not only safe, but would grow.
Financial Services
BUY
He likes this higher yielding royalty trust. They have made new investments that are improving the payout ratio. The valuation is good value. It is like a private equity company that collects royalties. There is some concentration risk, so it is not risk free. Yield 8% (Analysts’ price target is $23.26)
Financial Services
DON'T BUY
You have to know what you are buying. This is a fantastic management team. They own companies for income. You have to know what is underneath it. There are a couple of holdings that will not open up so fast as you might think, like a public gym. They might cut their dividend at some point.
Financial Services
TOP PICK
It was hit very hard by COVID-19 in that a lot of partner companies were forced to shut down operations. But just recently they came out with a lot of good news. They have had a pick up in a company that offers plastic surgery in the US. Planet fitness has begun to open up, and a supplier of PPE has done very well through the pandemic. We have also seen management take some positive steps in controlling the balance sheet. They reduced the dividend and announced they will become an income trust, which he feels will be very beneficial to the company. It will give them a much better earnings profile while lowering the payout ratio. (Analysts’ price target is $14.18)
Financial Services
BUY
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. It should be considered higher risk income, but it has a long history. Management is decent. It has survived many downturns and has managed to grow. Unlock Premium - Try 5i Free
Financial Services
BUY
Earnings come out at today's close. He'd like to see a dividend increase. It's very well priced. They just did an $85 million issue to fund 3 acquisitions/partners. AD looks very positive going forward in this economic recovery. He expects positive news in this report today. Pays a 7.8% dividend yield. AD converted from an income trust and increased the payout a little, considering taxes. The hope is that their investments will do better in the reopening and the stock will rise, though the yield may not remain this high. Longer term, AD could yield 5-6%, but he also hopes for regular increases in payout.
Financial Services
PAST TOP PICK
(A Top Pick Jun 29/20, Up 52%) Likes it a lot and it starting to hit its stride as some of their invested companies are coming back, while AD settles with other companies. They're having a record year for capital deployment. More opportunities have opened. He likes their diversity across industry. Most revenues now come from the U.S. He'd certainly buy at these levels.
Financial Services
TOP PICK
They invest in private companies through preferred shares, not commons, though are starting to do the latter now. They invest in good companies with track record across various industries. They increase funds if a company does well, but have a floor if things go awry. They've demonstrated an ability to earn a very good rate of return. They've had issues, but have grown overall. Most investments are American. Extremely well-managed. The yield should increase for years to come. (Analysts’ price target is $22.06)
Financial Services
BUY
It's been a top pick of his over the years. He likes the way they structure their business, investing in diverse, established companies, mostly in the US. They pay a compelling yield, but is a volatile stock, Is less exposed than before to the vagaries of the economy, though the economy will still affect them.
Financial Services
The challenge is that they are lending to what he would deem as stressed companies. These companies would source bank financing if they could, so that puts it in a higher risk camp. He couldn’t understand what their value add was. When he went through their struggles through the years, there was no consistency to their mistakes. One loss could wipe away 3 or 4 potential strong underlying opportunities, which was not a ratio he was comfortable with.