Opinions
Fabrice Taylor
Exchange Income
EIF-T
COMMENT
Dec 10, 2013
Stock price when the opinion was issued
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Beat on aviation in Q3, raised 2025 guidance on the back of their latest acquisition of Spartan. Lumpy, not as steady a compounder as BIP.UN. Always kind of cheap, now 13x PE for 2026 and growing 17%. Nice dividend, which will probably be boosted; payout ratio is fine.
Not for everyone. Small cap that gets forgotten, so that's a good reason to own.
Their transportation business in the far north is largely a monopoly. They've bought some fine companies and pay a good dividend, but leaves little cash. So when they buy a company, they do an equity issue. Some of their businesses are highly protected with a moat, good. But their industrial business carries economic/tariff risk. Dividend, valuation and management are all good. An income, not a growth stock.
Business is 80% aviation, 20% manufacturing. Recent acquisition looks accretive. Trades ~12x, growing ~16%. Money's flowing into safer areas like this one. Good balance sheet. Payout ratio is 68%, will probably boost dividend in the next year or two. Real growth engine is from being in the north and having really good pricing power.
Only thing is, if we're in for rocky markets, you'll probably get a chance to buy cheaper.
Chart looks very decent. At, or close to, an all-time high. Might see a bit of resistance, but looks to have some good upward motion. Trying to break out, and looks as though it can. Yield is 4.6%.
Could easily drop to $54. Not a lot of support below $50, so start reducing if it gets there.
Really likes the name, good business. Making all-time highs, expensive here. Doing all the right things, growing its dividend. Often the only airline in a Northern Canada region, so it's a monopoly. Owner/CEO is the real driving force, and she wants more clarity on the continuity plan. Yield is 4.2%.
Likes the underlying businesses. Wait for a better entry point. Aviation segment might not do well in a weak economy. Many segments operate in the North as monopolies. CEO is fantastic, but what happens when he retires? Dividend still growing. She'd want to see it at least in $60s before looking at it.
He no longer covers this. Something like a Mosaic Capital (M-X) in that they buy businesses and leave management in place and just get the dividend and do capital allocation. Started off in the airline space doing ambulatory airlines, basically up north doing evacuations. A good business because government pays you, pays well and pays on time. They took the cash and made other acquisitions and some of them have not worked out that well. That’s the risk with these things. This one is a “wait and see” for him.