Constellation Software Inc. (CSU.TO)

(A Top Pick March 18/14. Up 44.13%.) Still buying today. The risk is that at some point the growth slows down, but in this case, it won’t be like a hay stack where it rolls over, but will just slow down because they got to a certain size. Did a bond issue last fall indicating they could be making an acquisition. They are brilliant capital allocators.

This is a growth by acquisition. There is going to come a point where there is compression in the earnings, but the whole sector is not experiencing this right now. The whole sector’s in a bull market and it is going to stay there.

(A Top Pick Dec 24/13. Up 56.36%.) There has been no technical analyst that has pounded the table on this over the last 5 years, and yet it keeps going up and up and up.

Chart shows a strong uptrend from 2011. Anything technology driven tends to do quite well over the earlier part of the winter. He is very long on the tech stocks right now. It may be a tiny bit ahead of itself, but generally speaking up is good and down is bad.

(A Top Pick Oct 18/13. Up 81.67%.) Showing a lot of vitality. The current year’s growth rate is something like 35%-40%, and is expecting them to grow by at least 20% next year.

Growth by acquisition. Have done a very good job historically of buying companies. Ranks in the top 25% of his quantitative database. On a price to cash flow basis, it is trading about 14X 2015 earnings estimates, which is above the typical company. There is about a 13% cash flow growth forecast for 2015. He thinks they will continue to have organic growth as well as growth by acquisition.

Does not own it, but it is a hard company to bet against. Very high return on invested capital. They’re acquiring smaller companies. Their valuation allows them to do very accretive deals. It is expensive for his taste. Over the long term this is probably a good bet, however. The PE is over 20 today and he would get more interested at 15 times. It has been a great winner for growth investors.

(A Top Pick Oct 18/13. Up 61.96%.) His target price for the end of 2015 is $400. They are the best allocators. Have a strong balance sheet. If you are only going to own one stock in Canada right now, this would be it. Trading at 16.5X 2015 earnings, and is growing at 30% a year.

There is no sign of a top. He sees no reason to sell. Technology is a very good sector to be in.

The outlook is positive. They buy small software companies that give them a good return on their investment. They are an organic grower.

He was really impressed with the big spike in growth but exited in the March swoon, when anything that was highflying got hurt. Would like to get back in at some point. He would still be absolutely behind this name.

(Market Call Minute.) Great execution.

This has been a great stock performer. Even though revenue has gone from about $200 million to billions, the number of shares outstanding has been unchanged for 10 years. When you can grow without diluting your shareholders, it is brilliant. CEO owns $300-$400 million in stock. Now starting to do larger acquisitions. They have the ability to do third-party financing, where other people take the risk and they share in the profits. This is one of those great companies that you buy and 5 years later you will be happy.

The CEO is trying to be one of the few guys that actually can make an acquisition story work long term. They are going through trials right now because they issued a dividend and are now talking about possibly re-tracking it back if a bigger company came along that he could acquire. You can only acquire so fast, and then you’ve got problems and issues and legacies of stuff you are acquiring.

Has had a correction back from the $270 level. Just announced a new way of financing themselves, which takes away an equity overhang on the stock. Also, the new financing means that they are looking at some big acquisitions. This is going to solve the problem for people that are worried about an equity issue. This grows at 50% a year.