Park Lawn Corp (PLC.TO)

We continue to like PLC for its growth potential and it could accelerate its growth via more acquisitions. Analysts expect marginal sales and earnings growth for this year, but higher growth in future years. Its valuation has come down to reasonable levels, at a 15.9X forward earnings multiple. It generates positive free cash flows, issues a yield, and has recently been repurchasing shares. Its balance sheet has been growing over the years, its valuation is the cheapest it has been in over a decade, and we feel that these low price levels will not last forever. We continue to like the name at these prices. 
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The macro tailwind is there with aging demographics. But his main issue is them diluting shares. Also, their returns on capital aren't high enough. A decent, but not outstanding company.

Great company, industry, and management team. Enormous tailwinds from aging demographics. #2 player in North America, but still has only 2% of the market, which is hugely fragmented. Consolidating and growing organically.  Very compelling valuation. Growing faster than SCI, which has 20% of the market. Great long-term hold.

Even though it has sold off and its PE is lower now at 10x and the balance sheet is good, the problem is its still pricey at 22x and growing at only 8%. A good name, but doesn't love it.

Death and taxes are inevitable in life, so why not invest in funeral homes? But every time he looks at PLC they are buying more properties and running it debt--which is too high for him

It has had issues but earnings are more stable.

Editor's Note - The question was his preference over PLC and ATZ. PLC has had issues but earnings are more stable. ATZ is still a bit pricey. He likes it on valuation to growth but PLC is the better buy for the next year. 

Large increase in share price unaccounted for.
Long term prospects for sector strong.
Management team will need to manage business prudently. 

12 acquisitions in the last year, and that's one of the knocks against it. With higher interest rates, they'll have to pay more for funding. He sees the acquisitions being accretive to the story. Performing well. Not too late to add here.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Profitability improved. Acquisitive pipeline in motion. Attractive valuation and improved payout ratio. Shares have gained >75% since pandemic low. Unlock Premium - Try 5i Free