Stockchase Opinions

Mike Archibald Colliers International Group CIGI-T PAST TOP PICK Jul 06, 2022

(A Top Pick Apr 08/22, Down 4%) Down, but still outperforming the broader TSX. Pressure on growth REITs. Still an excellent business. Couple of acquisitions. Aims to double business by 2025. He'd be a buyer here.
$146.170

Stock price when the opinion was issued

0
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COMMENT
Be careful of the real estate space because of rising rates. Commercial properties will have to trade at higher cap rates and therefore lower prices. Treasury bonds have gone quickly from 0% to 4%. He owns short term bonds as cash instead of fixed income.
PAST TOP PICK
(A Top Pick Nov 15/21, Down 28%) Growth stocks sold off globally. Been around for decades. Management delivered 19-20% annualized return over 25 years. Solid. Unique acquisition strategy of leaving 25% shares in hands of original owners, so motivation is more entrepreneurial. He's buying.
PAST TOP PICK
(A Top Pick May 16/22, Down 14%)

It is in the business of real estate. It has grown through acquisitions and does well during downturns.

TOP PICK

It is in the real estate sector and rising interest rates have hurt the price. The downturn in the real estate market has been an opportunity and Colliers has been taking advantage of it. Also the brokerage part of the business has been getting no value in the price of the stock. Management has had a great track record over the years.       Buy 8  Hold 1  Sell 0

(Analysts’ price target is $158.15)
Unspecified

It grows organically and by acquisition but when buying another company it leaves 25% of the shares in the hands of existing management which motivates them to make it work. It is the fastest growing global commercial real estate services company.

DON'T BUY

Getting into real estate investment management, a pretty good business. Leasing and brokerage and office are not good right now. Hard to get people to come in to work. Trying to diversify. Trusts the CEO. Prefers FSV.

PARTIAL BUY

Real estate has been impacted heavily by higher interest rates. Office RE has been hit the most as there remains vacancies in offices. But if you feel that rates will decline (likely), CIGI will do better. If you like this name, buy a little now then wait 1-4 quarters and watch rates before adding more.

BUY ON WEAKNESS

Globally diversified, with 50% of revenue from US. Profitability is 20% ROE, considerably higher than market average of 12% in Canada, and US average of 14%. More leverage than he's comfortable with. Share price has moved sideways for a couple of years. Virtually no yield, so you need capital appreciation to create alpha. 20x PE, quite expensive for a real estate company. He'd be interested around $120.

HOLD
Another uncommon compounder.

A turnaround. Building recurring income. Owned since 1988. Great company. Hiccup last couple of years with real estate, rest is going well.

PAST TOP PICK
(A Top Pick Nov 06/23, Up 63%)

There's still upside. CIGI has benefited from rate cuts, since CIGI is in real estate. Peer CBRE announced strong results two weeks including double-digit revenue growth. There seems to be pent-up demand in the market. They use economic downturns not only to buy companies, but hire top talent. They have a record number of commercial RE brokers and agents.