Opinions
Keith Richards
Onex Corp
ONEX-T
COMMENT
Aug 26, 2024
Stock price when the opinion was issued
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Shares plunged in 2022 and part of this year, but have nearly recovered. Gerry Schwartz is no longer CEO. They've bought and sold many businesses. Onex's intrinsic value is $130-140, but shares trade at $90, so there's a big disconnect by the market. Onex keeps buying back shares and are ramping up acquisitions.
(Analysts’ price target is $112.33)Will continue to hold. Business performing well. Earnings continue to rise. Strong management team with sharp capital allocation skills. Current share price is cheap. Market not recognizing value in business. $145/share in capital, with a share price below $100/share.
ONEX has over $49 billion in assets under management including WestJet - with over $8 billion of its own assets invested. It trades under book value. Recently reported earnings showed a 27% increase in quarterly EPS. We recommend setting a stop-loss at $77, looking to achieve $119 -- upside potential of 28%. Yield 0.3%
(Analysts’ price target is $119.00)We reiterate ONEX, a Canadian private equity firm with WestJet in its portfolio, as a TOP PICK. It trades at 7x trailing earnings and under book value. The company is prudently using some cash reserves to draw down debt and buy back shares. We recommend trailing up the stop (from $77) to $89, looking to achieve $121 -- upside potential of 19%. Yield 0.3%
(Analysts’ price target is $121.33)We reiterate ONEX as a TOP PICK. Recently reported earnings showed growth again in cash reserves as the company bought back shares. Its structured credit business closed on 23 transactions, raising over $5 billion in new fee generating business. It trades at 9x earnings and under book value. We recommend trailing up the stop (from $89) to $108, looking to achieve $145 -- upside potential of 27%. Yield 0.2%
(Analysts’ price target is $1450.00)Our PAST TOP PICK with ONEX has triggered its stop at $108. To remain disciplined, we recommend covering the position at this time. When combined with our previous guidance, this will result in a net investment gain of 6%.
The CFO likes it on a fundamental basis. He has tolerated some negativity because of the fundamentals but wants to see it hold there.