Uni-Select Inc (UNS-T)

A distributor of automotive parts in Canada and in the UK and a US-based paint finishing shop. He bought this in February. It has not done well for him. It has made three bad earns announcements in a row. Last week they announced that the quarter would not be good. They also announced that the CEO was gone, which he sees as good because that CEO would over-promise and under-deliver. Finally, they announced a strategic review of the company, which he believes will lead to sale of one of its businesses, probably the paint finishing business, and this will unlock good value. Yield 1.7%. (Analysts’ price target is $25.64)

This company grew by rolling up paint suppliers in the US in the auto-finishing business, much like Boyd Automotive except it is a bit upstream, actually supplying the paint in to the shops. The company did well for a while but after they had acquired a big chunk of the industry, their pricing got high. Since then, earnings have been disappointing, their Canadian exposure has been tough with the economy slowing down, and the stock sold off. In addition, the automated driving support features will lead to fewer collisions and hurt the repair business over the longer term. Over the short term, investors could nibble at the stock at this price and then sell it on a bounce. The stock dropped today after the CEO departed abruptly and the company cut its forecast.

They have looked at in the past, but are not owners. They released weak quarterly earnings and thinks it may take time for the value to be there. He would like to see a couple of good quarterly earnings reports first.

Automobile parts wholesaler. Biggest in the US and Canada. In the US they are the biggest distributor of paint to body shops. The stock hurt because it had a bad quarter providing a good buying opportunity. Yield if 1.7% (Analysts’ price target is $30.33)

He bought this in the last week. It is in auto parts distribution in the US and UK. The stock has been hurt by Amazon and they acquired a UK distributor which impacted their debt. Going forward things look good. Yield 1.4% (Analysts’ price target is $32.67)

AutoCanada (ACQ-T) or Uni-Select (UNS-T)? She used to own this, but sold it. They made an acquisition in the UK, which didn't seem to have any synergies with anything else. You want to wait at least a quarter or 2 to see what the UK acquisition does for them. At this point in the cycle, you probably don't need to be anywhere near the car cycle. It's too late in the cycle.

Chart shows it had a nice run up from 2015 to the end of 2016, but is now leveling off. The chart right now is neutral and is in a bit of a trading range here. There is also some volatility. If it rallies, he would take some off the table. Dividend yield of 1.3%.

(A Top Pick April 11/16. Up 9%.) A really well run business. It has auto parts distribution in Canada and a paint distribution business in the US, where they are the dominant player, distributing paint to auto body shops. They are trying to grow through acquisition which is a good strategy for them. He was a little concerned with the last quarter, so sold his position.