Stock price when the opinion was issued
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Dividend yield of 4.0% Stable industry growth and good annual recurring revenues. Geographic diversification across Canada and the UK. Opportunity for future acquisitions. Unlock Premium - Try 5i Free
Likes the managers whom he recently met. Last year was crazy because of European gas prices, especially in the UK where they operate raised their expenses. They're in a stable business and are well-run. Lots of free cash flow that could lead to buybacks and/or dividends. He added on dip earlier this year. KBL is adding capacity that could raise the dividend.
Not the most exciting until you look under the hood. Its M&A cadence is picking up with more deals done recently. Stable business with long-term contracts, recurring revenue. Hospitality, but also healthcare. Finally starting to see more volume since Covid. Great business, generates a lot of cash, yet trades at only 6-6.5x EBITDA. Right in the crosshairs of private equity.
Once it makes an acquisition, it can use its size, scale and know-how to grab more contracts from that geographic area. Don't forget -- they have to pick the stuff up and then deliver it after they clean it. That know-how is really valuable, and they can do it at quite a margin. 15-20% EBITDA margins on contracts.
It is a solid business, very much under the radar. It is well run with an excellent management team. In 2022 there was a 20% increase in natural gas prices in the UK but it has worked its way though that. It has a strong business with the medical profession. He doesn't want it taken out..
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Boring laundry business, but stable long-term contracts. Hotels, hospitality, healthcare. Used to be predominantly in Canada, but a series of small acquisitions in UK. Big, transformational acquisition in UK yesterday, making them a regional player. Immediately accretive, synergies to be gained. Revenue split between Canada and UK now 50/50. Issued equity, stock came off.
Likes management. Fragmented industry, so can expect more tuck-in acquisitions. Yield is 3.48%.
This company is planning for 10 years, not just one quarter. They are shifting operations to more efficient facilities. That causes disruptions and causes uncertain earnings while they make that shift. But when they make that shift, it is by far the right move to make, and their margins go up. There were 2 new contracts that they didn’t win this year, and the stock took a pretty big hit. The stock has gone way down and he thinks it is very attractive. They sign 10, 20 year contracts, and the new facilities will kick in and improve margins over time.