Recipe Unlimited Corporation (RECP-T)

(A top pick October 25/17, up 10%) Name changed when they amalgamated with other restaurant brands. He likes this space. Consumer spending in this space is high. At this point, he would look at diversifying out of this and buying some other names that are down 15 or 20%.

(A Top Pick September 27, 2017. Up 22%). This was called Cara. It owns Swiss Chalet and is the largest restaurant chain in Canada. The company suffered after he bought it because of the downturn in the economy in Alberta. Restaurants are heavily dependent on growth in same-store sales, which suffer in a downturn. Recipe Unlimited countered this in three smart ways: (1) They bought St-Hubert in Quebec, which diversified their market and gave them a strong brand; (2) They bought the Keg, which moved them upscale with a very good growth profile; (3) They brought in a new CEO with a very good track record. The company is still Ontario-centric, but much less than it used to be.

They are one of the largest restaurant operators in Canada. Their portfolio of brands is very hard to replicate. They have started to grow same store sales. They will continue to try to be acquisitive. (Analysts’ target: $32.61).

(A Top Pick Oct 25/17, Up 13%) Shortly after he was on they did an acquisition of The Keg and that will work out well for them. He has taken some profits and now thinks there is better value out there. He would take profits.

Formerly, Cara Operations. It has been a turnaround stock that faced headwinds with falling oil prices in Alberta. They have improved with a good acquisition in Quebec and recently purchased Hy’s Steak Houses across Canada. Same restaurant sales have been growing and they have invested in the ambience of the locations and he thinks that will attract patrons.

Same store sales suffered when people weren't going out to restaurants in western Canada. They made some interesting acquisitions in Quebec and Ontario. They most recently purchased The Keg. He likes the stock here.

His second largest holding. They double down on it a few months ago. The country’s largest restaurant and casual dining chain. It was suffering because its exposure to Alberta mainly. They made a couple of very good acquisitions (most recently The Keg). They are reporting better to expected earnings and metrics and the stock responded accordingly but till a cheap stock.

(A Top Pick Feb. 10/17 Down 1%) The largest full service restaurant chain in Canada. Early in 2018 the stock rallied after an acquisition in Quebec. They have announced the acquisition of the Keg operations company. They have a large Alberta exposure, which is slowly improving.

(A Top Pick Feb 10/17, Up 2%) It got hurt because same store sales had gone down. They have been refreshing some of their older restaurants. It is excellent value here.

(A Top Pick Dec 9/16. Up 3%.) This really hasn't come to fruition yet. He chose it for its discounted valuation. Trading at around 9X versus same restaurant peers that are trading around 15X that have growth. It has been impacted by minimum wage hikes. He is looking for 3% restaurant sales growth over 2018 from a rebound in Calgary and the strong Québec. A very good name to be owning.

The largest restaurant chain in Canada, and have grown quite a bit by acquisition. The stock went public and it was a market darling until it got overpriced. Then with the downturn in Alberta, oil prices started to tumble and people stopped going, so same-store sales took a big hit. That is now starting to stabilize. They’ve made some acquisitions which have diversified them. Valuation is very reasonable. Dividend yield of 1.6%. (Analysts’ price target is $26.)

A conglomerate of restaurants that are milestones. This was in a downtrend, but had some decent earnings. Announced an acquisition of Pickle Barrel restaurants in Ontario and Québec. It seems the franchise options work and make money, so he is looking for 15%-20% upside from current levels. (Analysts’ price target is $27.)