Avigilon Corp (AVO.TO)

Still growing between 30-50% on the top line. They have more organic growth than he usually sees in the Canadian space. You are getting it really cheap here.

He is a value investor, so has a hard time paying up for high growth expectations. This has been volatile for the last 6 months because of high expectations. Getting the multiple down from 30X to 25X, it is still an expensive stock. Looks like they have a nice growth platform in front of them, but he worries that there is a huge amount of growth that they have to build into. Too risky for him.

Pulled back because earnings missed expectations. They want to invest more in the future. Suspects their business is hitting the wall. 55% growth margin in the most recent quarter.

(A Top Pick Aug 2/13. Down 0.32%.) Sold his holdings at about $31. A year ago, it was growing like crazy but also producing free cash flow. The company then hired a ton of sales people to help their growth, so their expenses went up. Thinks it is a buying opportunity. Likes the underlying technology, and extremely high definition security system and they have new software that ties it all together.

Sold his holdings at around $29. Continues to have great numbers from the revenue side. They set a target of $500 million in revenue in the next 24 months and continue to execute that way. To grow at that fast a rate and to continue to grow as you build, takes a lot more capital. In the last quarter, they spent more money than the street was comfortable with. As a result, their actual earnings number was lower and the stock sold off. Probably in a penalty box to a certain degree. The street wants to see the perfection between growing at a fast rate and producing earnings. Expects they will get to their end points and it is just a matter of how much management has to spend of their revenue to get there. Once they get there, it is going to be a big business and will probably end up getting taken out. If he saw improvement in those earnings, he would probably get back into this.

Has dropped sharply since the release of results. The CEO’s focus is on growth at the expense of profit, ramping up huge expenses. To be fair, management has been going around for the last couple of quarters, saying “we are investing in a business and we want to capture growth while our offering is unique and while we don’t have competition”. Margins did come under pressure, probably a little more than even she would have expected. Also, the Cdn$ having increased in the last quarter, is probably more negative for them than any other companies that she covers. They hardly have any sales in Canada. Stock is inexpensive and they did have 66% revenue growth.

Reported quite a bit short of what the analysts wanted to see. When this happens, he looks at this as an excuse to sell.

Reported numbers last week and they were pretty good. One of the fastest organic companies he sees in Canada. Targets have been taken down so momentum guys are getting out. They are leaders in their space. This is a very good buy here but there will be lots of volatility. This is a very fast growing company.

Keep increasing the dividend and have very strong franchises. Has a much higher potential return as well as higher potential loss. Have an interesting product. There have been a lot of executive departures which makes it much more difficult to feel comfortable about how things are going to turn out. The team has to be replaced and you want to see that they can execute on the plan.

He was Short this at about $26, just before their numbers came out. This is a company that is making a very good product, sales are growing very, very rapidly, and it is a high multiple stock. This is the kind of stock that a lot of hedge funds own because they are fast growers. When growth disappoints, everybody tries to leave at once. This is now a “show me” story. Expect it is dead money for a little bit. Trading at a huge premium multiple.

The numbers seem to be very good and they took a lot of market share from others.

Had owned this under $7 and sold it at around $29. Had broken down from a technical analysis. Also, had broken down in his rankings a little. It is now showing up on his radar screen again, and he is watching it.

High definition surveillance cameras. Captured a lot of market share, and the company was growing very, very fast. Over 50% growth for the past 8 years prior to them going public. They went public and the stock went crazy. Everybody loved it, and then their CFO quit on the day of earnings. Everybody panicked. Stock is very volatile, and this is a high-growth company in a high-growth industry. Sales growth is 50%-70%, profit margins are increasing and the company is sitting on about $100 million in cash. He likes it.

A very niche area. There is a lot of good news and the stock is going up and then it turns. It looks to him like you have this strong potential support at $20. The market seems to have forgotten what this breakout was about. You need to see the break out establishing.

There are corrections in time and in price. When a stock goes through a downward correction it is next likely to go in a horizontal correction (a correction in time). The stock is currently fighting its 40 week moving average. He thinks the stock will test the $20 area.