Opinions
Michael Sprung
Canada Bread Co.
CBY-T
SELL
Mar 07, 2014
$72.120
Stock price when the opinion was issued
food processing
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BUY
Has done phenomenally well. Looks like Maple Leaf is looking to take the company private. Squeeze play as the remaining float only costitutes 13% of the company. This is the reason for the stock increase, not the fundamentals of the company. They are making in the $3 vicinity and might improve 10% in the forward year. Too rich. Prefers George Weston (WN-T).
food processing
TOP PICK
Stable business for an uncertain time. A duopoly in the fresh bakery business between Weston and Canada Bread. Have 43% market share. Great balance sheet. Trades at only 5.9X enterprise value to EBITDA versus 7 or 8 times from its US peers. Maple Leaf owns 90% so at some point in time could possibly take the rest over.
food processing
PAST TOP PICK
(A Top Pick Feb 7/12. Up 18.98%.) 90% controlled by Maple Leaf (MFI-T) which has gone through some of their own issues and are currently under a huge CapX program, which is costing them a lot of money. Believes that in a couple of years, when they are through this expansion, they will be generating a lot of free cash flow and will possibly buy out the remaining 10% of Canada Bread.
food processing
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Maple Leaf foods is changing their overall strategy. Going more over to protein. Price being paid is fair. His temptation is to sell it here. Prefers to buy Maple Leaf a few dollars lower.