Grande West Transportation Group (BUS.V)

He continues to like this. They’ve had their 1^st sale into the US on the transit side, as well as the non-transit side. Feels there is tons of room left in the future.

This does smaller buses, and he likes the idea of New Flyer (NFI-T) acquiring them. It is not the same business because of the smaller buses, but it may make sense as a complementary kind of tuck in for New Flyer. However, he wouldn’t invest on that speculation. Feels their real test now is that they have to deliver on the buses. They have a good backlog and have to show that they can actually build the buses and deliver them on time and not get into any cash constraints. Doesn’t see any indications of this being a problem going forward. Because of the strength of the stock has seen, it is probably better to average in, versus jumping in today.

BC originally approached them for shorter busses. They are cheaper to produce, run and maintain. The stock has had a tremendous run here. They got approval to sell their busses into the North American market. They produce them in China. You would want to look for a pull back to buy them. They are relatively new so don’t get a full position. NFI-T is also owned by him.

He likes the company and is impressed with the orders. They have been getting a lot of investor attention. There is an execution risk in that they have to fulfill all the orders. Management has done a very good job here.

This has done phenomenally well. They are still in the early stages of great things. So far, they’ve rolled out across Canada, they’ve got initials orders from a number of different transit systems in Canada, and now those transit systems are coming back ordering big multiples of what they initially ordered. They are also a little into the US. There are really 2 big markets in the US, 1) transit market and 2) private transportation such as airport shuttles, rental car shuttles, etc. They needed their “Buy and Build America” certification before getting started in the transit market. They now have that. They have a partner that has just started to ramp up with the sales team. During this year, you are probably going to see a number of announcements where they are getting initial orders. He is excited where this company could be 3-5 years from now.

They make smaller buses, relative to New Flyer (NFI-T). It will probably be his “go to” name over the next couple of years. Thinks they are at an inflection point where they have over 240 buses in backlog. Have just started to ramp up in terms of production, and thinks Q1 will be a good quarter. Has a huge advantage over everybody else. It is more cost efficient for people to buy these buses, because if you look at the 40 foot buses that are out there, they are driving around fairly empty after peak hours. The US is spending a lot more money in this area in terms of municipalities. Probably going to earn $.10 this year, and maybe $.15 in 2018, and will probably trade at around 14X next year’s earnings, but earnings are going to be extremely strong. (Analysts’ price target is $2.25.)

Manufactures 30 foot buses which replace traditional cutaway buses, or can be run on routes that don’t have as many people as is needed for a 40-foot bus. Super efficient for a transit system, etc. Management is really hitting their stride and are starting to pick up orders. They’ve also had their 1^st order in the US, and are expanding into airporter transportation business in the US. (Analysts’ price target is $1.29.)

Basically a baby New Flyer. They make a smaller version of the transit bus, with 3 models, a 27.5, a 30, and a 35-foot bus. For routes that don’t have the same amount of traffic, this company is able to build a bus that is more efficient, cheaper and more durable than the alternatives. They’ve been in business for about 4 years and trying to build everything up, and are now getting at the point where they are actually going to be cash flow earnings positive.