Opinions Colin Stewart
The Brick LtdBRK.TOTOP PICKJul 27, 2010
One of the larger appliance/furniture retailers in Canada with a 7% market share. Restructured balance sheet and got very long-term supportive investors in place. Last few quarters have been records. Generating a 20% plus free cash flow yield.
Colin StewartOwned
$2.10
Stock price when the opinion was issued
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PAST TOP PICK
(A Top Pick Oct 31/11. Up 20.01%.) Has gone a bit quiet because of fears of housing and statements that consumers should slow down. RBC is forecasting growth of 17% starting next year. Probably a nice Buy at this price.
Michael SmedleyOwned
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PAST TOP PICK
(Top Pick June 10/11, Up 57.48%) Still cheap. Management team did a wonderful job turning it around. At some point it might issue a dividend again.
Colin StewartOwned
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TOP PICK
His favourite investments are broken stocks on the mend. Very cheap. Have cleaned up their balance sheet. Free cash flow is about $100 million a year right now with a market cap of 425 million giving you a stock for 4.25X cash flow.
Fabrice TaylorOwned
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TOP PICK
Have done a great job of turning the business around and regaining market share. This year will have record EBITDA in spite of retail conditions in Canada. Trades at a pretty big valuation discount to its peers. Generating a ton of free cash flow and buying back stocks.
Colin StewartOwned
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TOP PICK
(A Top Pick Oct 29/10. Up 14.17%.) Largest furniture retail chain in the country. This is a turnaround situation run by very competent people. Making money and has no debt problems.
Michael SmedleyOwned
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PAST TOP PICK
(A Top Pick July 27/10. Up 11.43%.) Reporting earnings Wednesday night and think good things will be there.
Colin StewartOwned
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TOP PICK
A turnaround story. They did a phenomenal job. Balance sheet in good shape now. Gaining back market share. But the stock is one of the cheapest retail stocks in Canada. They will try to buy back 25% of outstanding shares.
Colin StewartOwned
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TOP PICK
Another turnaround story. Has a huge rack of retail branches.
Michael SmedleyOwned
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DON'T BUY
Appliance/furniture retailer. Sales have fallen. Had more liquidity pumped into it, primarily from Fairfax Financial (FFH-T) including a recent $25 million line of credit giving more breathing space. Housing starts/recovery in Canada seems to go against what is happening in the US, which gives him pause.
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WAIT
Not had a good time of it in the last 6 months. People stopped buying furniture. Canada’s housing market is lagging the US. Thinks it will be weak for the next 12 months. Housing market will turn around before the 2011 conversion for taxation. Will be along road for furniture retailers to recover. Sell or wait 2 years.
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