James Telfser Heroux-Devtek Inc. HRX-T TOP PICK Aug 23, 2016

(A Top Pick July 21/16. Down 20.91%.) Earnings have declined and pretty modest growth is being forecast. With their 9% free cash flow yield, it is still a very interesting company.

They execute brilliantly, integrating very well. They produce landing gear for airplanes. They finished absorbing a major acquisition of a Spanish company which got them into Airbus. They also work on the Boeing 777x. The capex and acquisition spend is now done, so they can pay down debt or buy more companies. HRX is one of the most profitable companies in aerospace/defence. But the market hasn't given them the credit in the last quarter, so now is a good time to take advantage of their discount valuation. (Analysts’ price target is $22.71)

Very strong Canadian company that doesn't get enough attention from the markets. Last quarter starting to prove business prospects. Landing gear in very high demand within airline sector. Trading at discount to other names in the sector. Very high barriers to entry within the business. Margins continue to expand - will be good for cash flow. Balance sheet very strong with cheap valuation.