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Latest Top Picks

Stock Opinions by James Telfser

TOP PICK
This business is not impacted by inflation. Has been impressed with how they operated. Has executed a growth by acquisition story in the US. They have done many deals and the market is still fragmented so there is still growth. People want to do business with PLC. Earnings have been positive and they are adding more services. A good long term buy. (Analysts’ price target is $44.56)
REAL ESTATE
TOP PICK
The auto parts were a sector at the top of their list. Demand for cars is still hot. Best in class operators in the auto space. The CEO has done a great job at managing this business. Has outperformed competitors. There will be years of demand on this great backlog. Valuation is at 4-4.5x EBITDA. With a series of earnings beat, it could trade at 6x. Excited for the future prospects. (Analysts’ price target is $96.00)
transportation equip & components
TOP PICK
Has held this for a while. A great business that knows how to generate free cashflow. The challenge for them has been that the border has been closed and their due diligence has been slow. Revenue growth should start to grow. As this comes back, investors should start to notice them. (Analysts’ price target is $68.50)
computer software / processing
PAST TOP PICK
(A Top Pick Oct 15/20, Up 33%) Reported this morning. Completed a 7:1 role back. Pulled off an acquisition that was transformational and allowed them to compete with their US peers which trades at higher multiples. Still in a good place. Been impressed with them so far.
Telecommunications
PAST TOP PICK
(A Top Pick Oct 15/20, Up 29%) Best in class company in an oligopolistic space. They do elevators. Has hit a high of $91. About 20% exposure to China. This same story has happened to one of their competitor. Service side business does go up as well.
machinery
PAST TOP PICK
(A Top Pick Oct 15/20, Up 180%) Really struggled to get lift-off in the last cycle. A fantastic growth platform. Automating manufacturing process and on-shoring is a tailwind. Has made 3-4 deals since then. Bought a life science business last week, which sells equipment. All the pieces are in place to close the valuation gap with US peers. MNA will continue to reward them. There are lots of potential acquisitions.
misc industrial products
COMMENT
US Inflation. Have to look outside of the current period that we are reporting for. Some activities suggest it could get better in the future. Looking at inflation and central banks, he does not think the magnitude of inflation priced into the market will be realized. If supply chain issues are resolved, inflation should be modulated. For example, there is pressure being lifted from the auto industry with semi conductors.
Unknown
COMMENT
Generally, the higher quality companies tend to check back when materials and energies perform. This is a good entry point for good companies. There are pockets of the market where there is good value. Valuation disconnect in Canada is quite wide compared to the US. Both are good markets.
Unknown
BUY
Has been following this story closely. Nitrogen and potash prices are running up. A solid demand environment for Nutrien which should support their valuation. Last quarter was great. Would continue to hold it.
agriculture
BUY
A fantastic business. Supplies laboratory supplies to businesses. Has been heavy on acquisitions, generating a strong return on capital on these acquisitions. A great long term hold.
electrical / electronic
DON'T BUY
A very successful Canadian company up to this point with e-commerce and payments. Has grown revenue significantly. However, retail has slowed and they are experiencing some growth issues with SMBs. There has also been the short report and the weaker guidance.
0
BUY on WEAKNESS
An insurance company. Cashflow has been through their PnC insurance business in Canada. This has funded the specialty insurance in the US. A spin-off of BAM.A. A fantastic company that is growing 50%+ and it is expected to continue with a mix of organic and acquisitions.
0
BUY
They have grown revenues at 25%+. All board rooms are talking about supply chains. It is also about the ESG model. Still has a long runway in front of them. RapidStart has tightened bringing the solution to market. They have a growing addressable market. Reasonably valued.
0
COMMENT
Still believes they are a great business with great assets. Yield is strong and there is good growth. These assets are not being built anymore so there is a scarcity view.
oil / gas pipelines
BUY
Growth by acquisition story. In the business solution business. As long as this continue to grow, they will generate cash. One source of concern was issuing equity to fund acquisitions. Did not think it was a high quality business but they have continued to make acquisitions and this should continue to work.
Technology
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