Opinions

Stephen Takacsy, B. Eng, MBA Andrew Peller ADW.A-T DON'T BUY Jun 12, 2024

Stores may or may not be impacted by Ontario government rolling out more retail locations. The Pellers stepped down from the board, possibly planning a bid to privatize the company but he's not really sure.

Stephen Takacsy, B. Eng, MBA

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$3.850

Stock price when the opinion was issued

breweries beverages

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PAST TOP PICK

(A Top Pick Mar 22/21, Down 34%) Company had tough time during pandemic. Margins not as strong as expected (rising packaging/shipping costs). Expecting strong rebound in sales as pandemic ends. Launching new products (spirits etc.). ~12 P/E stock price presents buying opportunities. Well managed company with strong free cash flow.

PAST TOP PICK

(A Top Pick Apr 28/21, Down 32%) Beverages had a good run during Covid as consumers stocked up. Peller saw good growth, even though some areas of Canada were shut down. But import costs have risen, so margins have declined in the last few quarters. The good news is that travel and restaurants are reopening--and these offer Peller higher gross margins, which he expects to gradually improve this year into next. Trades at a cheap valuation now, so it's a good time for a long-term investor to enter. Brighter days are ahead.

BUY

Very well managed, high quality company. #2 company in Canadian wine market. Recent market selloff has created buying opportunity for investors. Expecting post Covid-19 alcohol sales to rebound quickly. High margins will allow for profitability going forward.

BUY ON WEAKNESS

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Expanding product offering to other spirits. E-commerce helped increase sales. Regulatory and taxation risks. Valuation reflects slower earnings growth.

Unspecified

It has been a tough market for small cap companies. Has had higher input costs and challenges with the restaurant and hospitality industry being shut down for part of the pandemic. A well managed and quality company that trades cheaply. It will take a while for margins to improve so could sell for a tax loss and buy back later.

HOLD

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. New e-commerce platform could help sales. Slower growth than expected. Debt remains high. Trades at discount to peers.

BUY

It was hit hard during the pandemic when restaurants were closed, but are recovering strongly. Recently, have faced higher freight and material costs. Despite those, margins are healthy. Consumers are returning to bars, restaurants and airports. He expects better results in coming quarters.

HOLD

Very challenging through pandemic. Hit by higher input costs. Took on debt to make acquisitions prior to pandemic. Valuation is massively compressed. Assuming this is the bottom, better days ahead.

COMMENT

The price has dropped substantially because of slowed growth and problems like supply chain issues. However there should be more retail distribution opportunities for the wine industry. Also there may be financial programs that will help as well. Margins should improve and he feels there are better days ahead.
Editor's Note: The caller was also asking about Market Call having someone on to cover micro-caps.

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Stephen Takacsy, B. Eng, MBA Andrew Peller ADW.A-T DON'T BUY Jun 12, 2024

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