Opinions by Ryan Modesto | StockChase
163
Ryan Modesto

Managing Partner

ON STOCKCHASE SINCE Mar 2016


Opinions by Ryan Modesto


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2017-11-14

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A Comment -- General Comments From an Expert 

Economy. The world economy is pretty well a synchronized growth right now, and the markets look good through to the end of the year. Not since 2007 have all major global economies been growing in tandem. It really creates a virtual circle for the economy. Investors needn’t be too concerned going into the holiday season. You have a strong Canadian consumer and a pretty strong Canadian economy, so holiday sales should be pretty strong. You need to be focusing on earnings, etc. in the 1st quarter of 2018. 2017 was such a strong year with strong results, that year over year comparables are going to be much tougher to beat in 2018. The growth rates may be slower than they were in 2017.

Ryan Modesto

Managing Partner, 5i Research

Price: $0.020
Owned: _N/A

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2017-11-14

N/A
A Comment -- General Comments From an Expert 

Marijuana. Doesn’t follow specific companies, because he can’t get to the valuation they are trading at. The Constellation Brands investment into Canopy Growth has sparked a lot of interest, but this was done more as a defensive position. It was an interesting move and expects there will be a lot more institutional money flowing into the marijuana sector. He couldn’t justify this as an investment at this point.

Ryan Modesto

Managing Partner, 5i Research

Price: $0.020
Owned: _N/A

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2017-11-14

DON'T BUY
Alaris Royalty (AD-T)

This is having a hard time being on the right side of a new release. Went through some litigation, and results were not quite as stable as had been expected. They are having to deal with a few of their companies going into default. They are managing, but now the payout ratio is getting really tight, and they don’t have a lot of cash on the balance sheet. If they have more issues with some of the loans they have, they could run into problems with their payout. He would sit on the sidelines for now.

Financial Services
Ryan Modesto

Managing Partner, 5i Research

Price: $18.180
Owned: No

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2017-11-14

TOP PICK
Avigilon Corp (AVO-T)

Video surveillance technology. Just announced they are going to be launching a sort of software service product, and the market loves recurring revenues. Too early to get excited about that, but it’s interesting. They’ve had communication issues with the market in the past, which is what led to a lot of the downdraft. However, they’ve shifted strategies and are now focused on profitability. The last 2 quarters beat earnings estimates by 50% and just shy of 40%. Has a lot of cash on the balance sheet with the sale of a Vancouver property that is just going through now. (Analysts’ price target is $22.75.)

INDUSTRIAL PRODUCTS
Ryan Modesto

Managing Partner, 5i Research

Price: $19.840
Owned: No

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2017-11-14

COMMENT
Grande West Transportation Group (BUS-X)

Has been doing really well. They’ve ramped up their plants, got orders, and are now actually building and shipping buses. It is kind of expensive for what is a slow growth business. They are in the smaller, niche buses, which get less competition. Prefers New Flyer (NFI-T), as it is a much larger company which is starting to look at the smaller bus size niche. However, he likes Grande West if you want something a little higher risk with a little higher growth potential in the short term.

Transportation
Ryan Modesto

Managing Partner, 5i Research

Price: $2.550
Owned: Unknown

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2017-11-14

COMMENT
Cascades Inc (CAS-T)

He doesn’t follow this closely, but does follow the space. Hurricanes created disruptions on resin supply for all these packaging companies. Prices have been rising and eating into the margins. These are generally lower margin companies, so it is a big deal when you start seeing margins erode. They have the ability to pass these increases on to the customer, but that won’t happen until down the road. There may be a few quarters of lower results than what you expect. When you get past 2 quarters, you should be fine with these companies. This company is okay, but he prefers CCL Industries (CCL.B-T).

east coast forestry
Ryan Modesto

Managing Partner, 5i Research

Price: $12.640
Owned: Unknown

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2017-11-14

COMMENT
CCL Industries (B) (CCL.B-T)

He really likes this. There are some resin issues, and margins are getting eroded a bit. They’ll be able to pass those costs on, in about 6 months. This may not do a whole lot over the next 2 quarters. Over the long-term, it has done very well for shareholders. Acquired a money printing company, so in each country, they only have one customer, the central bank. A very chunky business, and the quarter over quarter comparables are going to get a little messier than in the past. You are going to have to look at it as an ex-money printing business, as one day they may get a random order from a central bank, and it may not happen again until 2 years later.

packaging/containers
Ryan Modesto

Managing Partner, 5i Research

Price: $59.120
Owned: Unknown

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2017-11-14

DON'T BUY
CRH Medical Corp. (CRH-T)

Thinks management got caught off guard with the Medicare/Medicaid changes. Listening to the calls, he didn’t have a lot of confidence. Their business model is a bit broken now. With the share price and valuation so low, they are not getting as much bang for their buck now. Heading into the tax loss season, this is probably going to be one of the big targets. He would sit on the sidelines, at least until the new year.

biotechnology/pharmaceutical
Ryan Modesto

Managing Partner, 5i Research

Price: $1.920
Owned: Unknown

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2017-11-14

COMMENT
Descartes (DSG-T)

He likes this company. A “software as a service” business model. Has very consistent revenues. For guidance, they say “whatever our revenue was this quarter, that is our guidance for the next quarter”. This usually works and they add a couple of percentage points to it. Trading at a really high multiple, but that’s because they have this great recurring revenue model. Once a customer gets entrenched with their offering, it would be such a hassle for them to switch over to something else. Very consistent for a tech company.

computer software/processing
Ryan Modesto

Managing Partner, 5i Research

Price: $38.040
Owned: Unknown

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2017-11-14

PAST TOP PICK
Great Canadian Gaming Corp (GC-T)

(A Top Pick Sept 30/16. Up 29%.) He still likes this. May be a bit conservative in the short term. They’ve been swept up in money laundering headlines. Feels a lot of people are missing the mark, where they think the company is doing something nefarious, but to him it sounds more like a broad regulatory issue in BC, and there may be some tweaks to the rules. The real story is with the GTA gaming bundle they just signed. Buying on weakness is a fine strategy.

entertainment services
Ryan Modesto

Managing Partner, 5i Research

Price: $29.810
Owned: No

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2017-11-14

TOP PICK
Gluskin Sheff and Associates (GS-T)

A cheap company, valuation wise. They often pay special dividends. There were some litigation issues with the cofounders, but that’s behind them now. There is a new CEO coming on who has taken on a 2% position in the company, and thinks he is going to do some things to help move the share price. Dividend yield of 6.4%. (Analysts’ price target is $17.)

Financial Services
Ryan Modesto

Managing Partner, 5i Research

Price: $15.480
Owned: No

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2017-11-14

COMMENT
Knight Therapeutics (GUD-T)

He really likes this company, but is beginning to think he might be in the minority. Over 5 years, it is up over 100%. Has done well for longer-term investors. About 65% of their market cap is in cash, so there is some downside protection. Management has been doing a good job in investing money. You have to be patient. It’s going to take time for them to deploy all the cash they have.

Ryan Modesto

Managing Partner, 5i Research

Price: $7.860
Owned: Unknown

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2017-11-14

COMMENT
HIVE Blockchain Technologies (HIVE-X)

Digital currency is really interesting. Doesn’t think anyone really knows what is going on generally. The real large demographic news case is still getting developed. You have to going to the space with eyes open. It is speculative. If you have a speculative portion of your portfolio and understand you may lose 50% or 100%, you can make a case for this. He thinks it is going to get interesting when the markets open up a bit and you get ETF’s holding these.

Ryan Modesto

Managing Partner, 5i Research

Price: $3.450
Owned: Unknown

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2017-11-14

TOP PICK
Kinaxis Inc (KXS-T)

Just lost a big customer in the far east, and the market got really concerned, but it really looks like it was a head fake. Their recent earnings growth is still there and they’re partnering with new customers who can help sell their products. This and Shopify (SHOP-T) are your 2 larger cap growth tech companies out there. Now that Shopify is seeing some issues, some attention may be turning back to this company. A volatile name, but if you can look out past a year, this company is going to do well for shareholders. (Analysts’ price target is $87.50.)

Ryan Modesto

Managing Partner, 5i Research

Price: $70.850
Owned: No

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2017-11-14

BUY
Magna Int'l. (A) (MG-T)

Has done a good job of adapting to all the peak auto concerns and autonomous cars. There is still going to be a demand for cars regardless, and this company can supply the parts. The balance sheet remains strong. They are buying back shares as well as having a dividend. Still a pretty cheap company. The premier manufacturing company.

Automotive
Ryan Modesto

Managing Partner, 5i Research

Price: $67.240
Owned: Unknown

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