It has been a favourite for him for some time. He bought it for income but it is providing some growth as well. They are overdue to raise their dividend but they are using their cash to grow. He does not mind that. He is buying for new clients. It’s a little rich but he is still buying it because there are some onetime items and the PE ratio is not too bad.
We are in a market where things that have been working have changed over the last couple of years. When that happens, institutions look at their investment managers to see if they’ve been keeping up or not. Because markets have been going through structural changes and institutions have been going through reallocations, there are lots of searches going on for managers. This company is right in the heart of that business and participates. It has been a pretty good performer and he would have no trouble owning the stock.
Valuation is pretty decent, and actually trades at a discount to its US peer group. It is a large player in Canada. Ultimately it should continue to benefit by growing in the US. Has a very decent free cash flow yield. Has a very predictable reoccurring revenue model that will support its earnings growth. (Analysts’ price target is $24.)
Morneau Shepell Inc is a Canadian stock, trading under the symbol MSI-T on the Toronto Stock Exchange (MSI-CT). It is usually referred to as TSX:MSI or MSI-T
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On 2021-05-19, Morneau Shepell Inc (MSI-T) stock closed at a price of $32.25.