Stockchase Opinions

Stephen Takacsy, B. Eng, MBA Diamond Estates Wines and Spirits Inc. DWS-X HOLD Jun 28, 2023

Challenges from supply chains, higher costs, and the pandemic. These things are normalizing now. Turning around slowly. Possible acquisition target. Very valuable assets.

$0.410

Stock price when the opinion was issued

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BUY
They are the second or third largest shareholder. It is a re-opening play with much improved results over the past few quarters. It has just finished a financing with insiders buying significant amounts at higher prices. Its price is down because of tax loss selling so it is a good time to buy. Good upside in one to two years.
BUY

It was hit hard during the pandemic when restaurants were closed, but are recovering strongly. Recently, have faced higher freight and material costs. Despite those, margins are healthy. Consumers are returning to bars, restaurants and airports. He expects better results in coming quarters. Lassonde owns over 30% of DWS and he expects them to buy out the company once DWS improves its margins in say 12-18 months.

HOLD

There are only two publicly traded wine companies, this one and Peller. The pandemic hurt both but they are doing a little better now. His company owns just under10% and Lassonde owns 30%. It needs a better bottom line but there is good upside on a take-over of the rest of the company at a much better price.

HOLD

Lingering issues from pandemic should improve. Expects largest shareholding family to buy out minority shareholders at some point. Should see nice jump in sales and profitability over next 12 months.

HOLD

He remains a big shareholder. The pandemic hurt a lot of alcohol companies by cutting off their sales channels, and supply chain problems push costs through the roof.  They now have a big shareholder, a major player in North American juices, and he expects them to buy out DWS. DWS has divested some assets like real estate. They're putting the pieces in place for this sale, he suspects. Chances of shares rising are quite good.

HOLD

Wine industry hit extremely hard in Canada -- BC wildfires, lower demand during pandemic, rising costs, less demand for alcohol in general. Good news that Ontario providing tax breaks and adding retail locations. Better days ahead. Still expects majority shareholder to do a buyout, so hold onto shares, as he's hoping for several multiples of what it's trading at now.

HOLD

Been a long, rocky road. Still owns it, unfortunately. The owners are committed to making this a success. The balance sheet is good now, and they're making small acquisitions. Hold or buy it now. He expects the company to go private of be sold. Good margins, but the wine industry has been hit hard in recent years (Covid, rising costs).

RISKY
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

DWS is a small company that produces and distributes wine; the company’s market cap is only $14M and it is extremely illiquid. Revenue in the last five years has been quite volatile, but overall revenue on a trailing twelve-month basis is basically flat compared to five years ago. DWS is unprofitable and burning cash. Overall, we see it as a high-risk name with low liquidity, uncertain growth and profitability prospects. We think investors are better off deploying capital somewhere else.
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BUY

Sector's had a rough ride, with the pandemic plus higher input costs. Wine consumption has flattened. Last results showed significant margin improvement. Growth is challenged, making small tuck-in acquisitions. Expects majority shareholder to eventually take it private.