ATS Automation Tooling Systems (ATS.TO)

They do tooling for factories. Manufacturing is moving to e-vehicles and more automation in factories. ATS can do this. Backlog is growing and just bought a company today. High valuation. Sound strategy. He has a 5-year timeline for ATS. Things are playing out well for them. Likes it.

This is one of his biggest positions. They report growth quarter after quarter. They were a challenged company but they changed management, changed focus to health care sector and cleaned up the balance sheet. They have no net debt. The stock has had a big run-up but the fundamentals have been going up at least as fast. It trades at a discount to US peers even though it has a much better balance sheet. It trades at about 12x EBITDA and peers trade in the mid-teens.

They design and build turnkey manufacturing and test systems. Doesn’t pay a dividend, but he thinks it is coming out of a long sleep with great opportunities as many companies bring manufacturing back to North America. They had a big earnings surprise this quarter and analysts’ forecasts have been revised significantly upward. Looking at the technical pattern, he thinks there is a possible 50% upside. (Analysts’ price target is $22.40)

They create automated liines for medical and small packaging. It's a cyclical stock, following the industrial cycle. But over the long term it has a future. They face competition from Chinese automation companies. A decent company and good business.

We're in the early innings of automation. ATA supplies this to and consults the energy, healthcare, industrial and maufacturing industries. ATA is in the thick of it. Stricter regulations in these industries demands precision that's found in automation. ATA has fine management. They've been on a buying spree. Their chart is very bullish and the stock price will continue to rise. Despite the recent spike, he'd still buy it. (Analysts' price target: $22.40)

We're in the early innings of automation. ATA supplies this to and consults the energy, healthcare, industrial and maufacturing industries. ATA is in the thick of it. Stricter regulations in these industries demands precision that's found in automation. ATA has fine management. They've been on a buying spree. Their chart is very bullish and the stock price will continue to rise. Despite the recent spike, he'd still buy it. (Analysts' price target: $22.40)

This is his second biggest holding. He bought it as low as $4 and change. He won’t be buying more at this price but people who buy under a different system, such as a momentum system, might find this attractive. This had a solar arm, which was one of the reasons he bought the company. Unfortunately, it didn’t work out and they had to sell it off. There is a new CEO now who he likes very much.

This company helps customer to automate their processes to help them be more competitive. It has a new CEO who is very focused on execution. The market believes they will increase profit margins by 5%. They also have a pipeline of acquisitions. The stock now has momentum. Yield 0%. (Analysts’ price target is $18.70 )

Has a Sell target of $21+, but wonders if he has overvalued where it can go. He’s happy to continue holding.

They did a nice job in the last 5 years in reinventing themselves. 16% return on capital. But it is hard to justify the price at this point.

When he looks across the automation value chain, there are a lot of really fascinating things happening. When you look at what robotics are able to do, it is an area that he thinks is going to greatly surprise people over the long-term. However, he didn’t feel this company was in the part of the value chain that he wanted to be in. There are some very interesting European, Japanese and American companies that have a little more of a moat around their business.

He has just started buying this. It fits in his theme that he thinks will play out over the coming months and years, the repatriation of industrial production back into Western economies. This company runs a pretty good consulting business for automating and manufacturing businesses.

(A Top Pick Nov 18/14. Down 16.91%.) A very good company and it is in the right space. Industrials performed horribly in 2015.

Helps optimize manufacturing processes for companies. The stock is moving in an upward trend. 43% of revenues come from the US. Expects you will see a good 15%-25% upside from here.