John Zechner MDA Ltd. MDA-T TOP PICK Jun 28, 2024

The story is still intact, still likes it. They are the arms dealer in the space race. They keep launching into space. Margins continue to rise and demand remains strong.

EPS of 28c beat estimates of 17c; revenue of $282M beat estimates of $277M. EBITDA of $55M beat by 3%. Backlog is $4.6B. Revenue and EBITDA guidance was raised, and the company says it will be cash flow positive in Q4. Sales growth should be 30% with the new guidance. Higher work volumes and stronger contributions from satellite systems and robotics helped the quarter/outlook. Things continue to look good here. 
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Valuation looks rather expensive. If you own, don't sell. Capitalizing on movement to greater private enterprise in space. Gaining a lot of business. Some engineers he knows think a lot of this company, and that its products and services are critical components of the space race.

Still likes the story. Lightening up, as stock's doubled over the past year. Hasn't been buying since ~$20 level. Valuation's gone up a bit. Great momentum relative to the group. Leading on the number of contracts.

MDA is not cheap at 37X earnings. But it has nice contract, a competitive edge (barriers to entry), a strong balance sheet and solid growth. EPS should rise at least 33% next year and it has leverage to further contracts. Debt is barely six months' cash flow. Free cash flow was $258M in the last 12 months. The last quarter was very strong and well ahead of estimates. We think $27 would be a good price. 
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It covers making satellites to software management. It is a great Canadian story and an example of how good Canada can be. It should grow by 30% for three years with great margins and trades at 13 times cash earnings. He is looking for a quick increase in the stock price to $50.    
Buy 6  Hold 2  Sell 0

Last few years have seen a resurgence of investment in space. Secured contract to build satellites for AAPL contractor. He's been buying recently, not that expensive. Exceptional long-term growth.

They make the Canada Arm but the real growth in the satellite business is in low orbit satellites - it is much cheaper. MDA is a leader in this with a big backlog and a lower cost structure. It has done well in this area lately but there is lumpiness in the earnings.

Parabolic move, which will wash out either in a downtrend or sideways action. Got the pullback, seems to have based, seems to be bouncing off. Resistance around $30. Doesn't look bad, especially in the midst of tariffs, good chance of getting to $30. Have to see if it goes through there.

Very successful. On his farm team. Has been incredibly resilient going through this downturn. Has a deal with AAPL. Talk of a merger in US would require financing; if markets are a bit better, he'd probably participate.