Opinions by Ryan Modesto | StockChase
188
Ryan Modesto

Managing Partner

ON STOCKCHASE SINCE Mar 2016

5i Research

https://research-5iresearch.lpages.co/free-trial-5i-research-stockchase/

188
Ryan Modesto

Managing Partner

ON STOCKCHASE SINCE Mar 2016

5i Research

https://research-5iresearch.lpages.co/free-trial-5i-research-stockchase/


Opinions by Ryan Modesto


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General Market Comment 

January 2, 2018

Market. 2017 was the year where almost everything went up. TSX was up about 6% and the S&P 500 was up about 19.6%. It wasn't just 1 or 2 sectors doing well, but it was across all industries and asset classes. Looking forward to 2018, the 4th quarter is going to be looking pretty good because we had a strong consumer going into the holiday season which should help boost a lot of consumer names. When you have strong consumers, other stocks usually do well also. However, he would temper expectations because it is not every year you are going to see all these asset classes go up like they did in 2017.

Market. 2017 was the year where almost everything went up. TSX was up about 6% and the S&P 500 was up about 19.6%. It wasn't just 1 or 2 sectors doing well, but it was across all industries and asset classes. Looking forward to 2018, the 4th quarter is going to be looking pretty good because we had a strong consumer going into the holiday season which should help boost a lot of consumer names. When you have strong consumers, other stocks usually do well also. However, he would temper expectations because it is not every year you are going to see all these asset classes go up like they did in 2017.

Unknown
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$0.020
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_N/A

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General Market Comment 

January 2, 2018

Hold or take profits on a stock that has gone up 67%? When you see a triple or a double, take out what you have put in. In that way the stock doesn’t owe you anything. If you still like what is happening, then you can let it ride.

Hold or take profits on a stock that has gone up 67%? When you see a triple or a double, take out what you have put in. In that way the stock doesn’t owe you anything. If you still like what is happening, then you can let it ride.

Unknown
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$0.020
Owned Owned
_N/A

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N/A
General Market Comment 

January 2, 2018

Cannabis leader? You need to have 2 hats when entering cannabis stocks. You have to have the speculative hat where everything is going well, momentum is good, and there is a lot of hype behind it. With that, you could definitely make an argument for owning them. It is speculative, high risk, and highly volatile. However, when putting on a fundamental hat, it is very hard to get numbers to where valuations are. Canopy Growth (WEED-T), valuation wise, is trading at about 5X next year's Book and 7X current year's BV, stock is trading at about 23X Sales. Analysts are expecting the company to put up $550 million revenue by 2020. Even if they do, and they issue zero shares, it will be trading at 11X Sales by 2020, which is a pretty high valuation. It’s hard to make an investment case for this. A preferred way is probably to Buy an ETF. 

Cannabis leader? You need to have 2 hats when entering cannabis stocks. You have to have the speculative hat where everything is going well, momentum is good, and there is a lot of hype behind it. With that, you could definitely make an argument for owning them. It is speculative, high risk, and highly volatile. However, when putting on a fundamental hat, it is very hard to get numbers to where valuations are. Canopy Growth (WEED-T), valuation wise, is trading at about 5X next year's Book and 7X current year's BV, stock is trading at about 23X Sales. Analysts are expecting the company to put up $550 million revenue by 2020. Even if they do, and they issue zero shares, it will be trading at 11X Sales by 2020, which is a pretty high valuation. It’s hard to make an investment case for this. A preferred way is probably to Buy an ETF. 

Unknown
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$0.020
Owned Owned
_N/A

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PARTIAL BUY
Alaris Royalty(AD-T) 

January 2, 2018

Looking a lot better than the last time he spoke about it. They were getting squeezed into a corner where they were losing on some investments. Didn't have a whole lot of cash, debt was higher, and the payout was looking tight. Recently came out with a press release, saying current investments were resetting their distributions, so there is more cash flow coming in from the reset. Also going to invest more money into 2 of their current investments, which will increase cash flow. If all this goes through successfully, they are expecting to take the payout ratio to just below 90%, a decent payout ratio for cash flow generator like this. Also announced they are going to be increasing the dividend if this final investment goes through. He would consider taking a half position until they finalize the closing of that final investment.

Financial Services

Looking a lot better than the last time he spoke about it. They were getting squeezed into a corner where they were losing on some investments. Didn't have a whole lot of cash, debt was higher, and the payout was looking tight. Recently came out with a press release, saying current investments were resetting their distributions, so there is more cash flow coming in from the reset. Also going to invest more money into 2 of their current investments, which will increase cash flow. If all this goes through successfully, they are expecting to take the payout ratio to just below 90%, a decent payout ratio for cash flow generator like this. Also announced they are going to be increasing the dividend if this final investment goes through. He would consider taking a half position until they finalize the closing of that final investment.

Financial Services
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$20.690
Owned Owned
Unknown

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BUY
Avigilon Corp(AVO-T) 

January 2, 2018

He likes this. They are ticking every box. Has a strong balance sheet, a property in Vancouver they are looking to sell, and valuation is pretty cheap. Good earnings growth and good revenue growth. They’re also looking at a new business where they are going to be doing software as a service business model, and markets really like software service businesses, because it is high margin, predictable types of revenue. They've been blowing out estimates over the last 2 to 3 quarters.

INDUSTRIAL PRODUCTS

He likes this. They are ticking every box. Has a strong balance sheet, a property in Vancouver they are looking to sell, and valuation is pretty cheap. Good earnings growth and good revenue growth. They’re also looking at a new business where they are going to be doing software as a service business model, and markets really like software service businesses, because it is high margin, predictable types of revenue. They've been blowing out estimates over the last 2 to 3 quarters.

INDUSTRIAL PRODUCTS
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$21.350
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Unknown

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DON'T BUY
Airboss of America(BOS-T) 

January 2, 2018

Rubber compounds, where they do conveyor belts, rubber automotive products, etc. The balance sheet is good, but they are in a state right now where nothing is really working their way. They are doing what they can. They are buying back shares, etc. and they still pay a dividend. Management has very little positive things to say right now. Until management improves, he wouldn't be too interested.

transportation equip & components

Rubber compounds, where they do conveyor belts, rubber automotive products, etc. The balance sheet is good, but they are in a state right now where nothing is really working their way. They are doing what they can. They are buying back shares, etc. and they still pay a dividend. Management has very little positive things to say right now. Until management improves, he wouldn't be too interested.

transportation equip & components
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$10.440
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Unknown

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COMMENT

He likes this company. It’s a higher growth company in the bus business. His favourite would be New Flyer (NFI-T). The selloff in this is because of a bit of a transition between different shareholders. Earlier on they had more growth oriented shareholders, and maybe a bit more speculative, but now they are getting older and are producing more buses. Shareholders are now probably thinking longer-term. It looks like they are doing all the right things.

Transportation

He likes this company. It’s a higher growth company in the bus business. His favourite would be New Flyer (NFI-T). The selloff in this is because of a bit of a transition between different shareholders. Earlier on they had more growth oriented shareholders, and maybe a bit more speculative, but now they are getting older and are producing more buses. Shareholders are now probably thinking longer-term. It looks like they are doing all the right things.

Transportation
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$2.030
Owned Owned
Unknown

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PARTIAL BUY
DHX Media(DHX.B-T) 

January 2, 2018

Produces and licenses children's content such as TV shows. Also licenses the properties to toymakers on different types of products. Got into a bit of a quandary where they were ramping up debt load and the earnings growth slowed down. The market punished the stock. Valuation is now getting to a level where it is a bit easier to digest. There are also activists entering the stock. The recent move by Disney, where they purchased some assets from Fox and were making a big statemen of the importance of owning content, is important. There may be potential buyers sniffing around a company like this, for the content. Still a higher risk, but he would be okay with a half position.

other services

Produces and licenses children's content such as TV shows. Also licenses the properties to toymakers on different types of products. Got into a bit of a quandary where they were ramping up debt load and the earnings growth slowed down. The market punished the stock. Valuation is now getting to a level where it is a bit easier to digest. There are also activists entering the stock. The recent move by Disney, where they purchased some assets from Fox and were making a big statemen of the importance of owning content, is important. There may be potential buyers sniffing around a company like this, for the content. Still a higher risk, but he would be okay with a half position.

other services
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$4.650
Owned Owned
Unknown

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TOP PICK
Dollarama Inc.(DOL-T) 

January 2, 2018

A very shareholder friendly company. Last year they repurchased 5% of their shares. Since 2012, they've repurchased about 24%. Meanwhile the stock went up about 400% over the same period. Feels they have a long-term organic revenue growth stream behind them. They are also looking at purchasing on online bulk sales, giving them a discount. Dividend yield of 0.3%. (Analysts' price target is $160.50.)

Consumer Products

A very shareholder friendly company. Last year they repurchased 5% of their shares. Since 2012, they've repurchased about 24%. Meanwhile the stock went up about 400% over the same period. Feels they have a long-term organic revenue growth stream behind them. They are also looking at purchasing on online bulk sales, giving them a discount. Dividend yield of 0.3%. (Analysts' price target is $160.50.)

Consumer Products
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$155.000
Owned Owned
No

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TOP PICK
BRP INC.(DOO-T) 

January 2, 2018

This does SeaDoos, Ski-Doos and ATVs. The company is doing all the right things. Did a 1st dividend a couple of quarters ago, a very strong signal for company paying a 1st dividend. The dividend will grow over time. It's an interesting name for exposure to consumer discretionary and baby boomer trends. Also has exposure to China, whose consumers are growing at a faster rate than other areas. Dividend yield of 0.7%. (Analysts' price target is $54.)

Consumer Products

This does SeaDoos, Ski-Doos and ATVs. The company is doing all the right things. Did a 1st dividend a couple of quarters ago, a very strong signal for company paying a 1st dividend. The dividend will grow over time. It's an interesting name for exposure to consumer discretionary and baby boomer trends. Also has exposure to China, whose consumers are growing at a faster rate than other areas. Dividend yield of 0.7%. (Analysts' price target is $54.)

Consumer Products
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$46.990
Owned Owned
No

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TOP PICK
Descartes(DSG-T) 

January 2, 2018

A great tech company. Does logistic software and focuses on distributors and transportation companies. It looks a bit more expensive when looking at valuation, but they have recurring revenues that are very sticky. Their forecasts are usually what they’ve done in the most recent quarter, which is their guidance for the next quarter. They usually tack on 1%-3% growth per share. That stability is why you are paying a premium for the shares. They just purchased a company, which analysts think they overpaid on, but management has always been very conservative when buying companies. (Analysts' price target is $40.94.)

computer software/processing

A great tech company. Does logistic software and focuses on distributors and transportation companies. It looks a bit more expensive when looking at valuation, but they have recurring revenues that are very sticky. Their forecasts are usually what they’ve done in the most recent quarter, which is their guidance for the next quarter. They usually tack on 1%-3% growth per share. That stability is why you are paying a premium for the shares. They just purchased a company, which analysts think they overpaid on, but management has always been very conservative when buying companies. (Analysts' price target is $40.94.)

computer software/processing
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$35.780
Owned Owned
No

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COMMENT

Hasn’t been a big fan of this since day one. Finds it hard to buy into the business model of high priced outerwear. Doesn't see the long-term competitive advantages outside of the brand name. He would rather sit on the sidelines.

clothing

Hasn’t been a big fan of this since day one. Finds it hard to buy into the business model of high priced outerwear. Doesn't see the long-term competitive advantages outside of the brand name. He would rather sit on the sidelines.

clothing
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$39.780
Owned Owned
Unknown

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BUY

Does utility contracts for retail housing, etc. Just made a big acquisition of a US energy company. He likes the company. One of the risks is that they have high churn rates. So far, they’ve done a good job. Have been increasing the dividend fairly consistently and the distribution looks stable. It has some growth potential. They've entered the solar space as well. There is a lot to like here. He would buy this more for income than for growth. Dividend yield is 9%.

Does utility contracts for retail housing, etc. Just made a big acquisition of a US energy company. He likes the company. One of the risks is that they have high churn rates. So far, they’ve done a good job. Have been increasing the dividend fairly consistently and the distribution looks stable. It has some growth potential. They've entered the solar space as well. There is a lot to like here. He would buy this more for income than for growth. Dividend yield is 9%.

0
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$9.310
Owned Owned
Unknown

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COMMENT
Kinaxis Inc(KXS-T) 

January 2, 2018

A software company that has built a better mouse trap in logistics. Their software is gaining a lot of customers and they are able to grow revenues for their customers. This is a perfect time. Over the long-term, they are in the right space. One of the higher growth companies on the TSX. As long as you understand there will be higher volatility over a 3-year timeframe, he thinks this is going to do well.

A software company that has built a better mouse trap in logistics. Their software is gaining a lot of customers and they are able to grow revenues for their customers. This is a perfect time. Over the long-term, they are in the right space. One of the higher growth companies on the TSX. As long as you understand there will be higher volatility over a 3-year timeframe, he thinks this is going to do well.

0
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$75.980
Owned Owned
Unknown

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BUY
Magna Int'l. (A)(MG-T) 

January 2, 2018

Thinks the industrial space is going to do well in 2018. It goes with the whole global growth phenomena that is occurring. You are going to have a lot of demand from economies across the world. This is the kind of company that should be able to benefit from this. The stock is cheap on pretty much every metric you can look at. Nice dividend. They are buying back shares. Dividend yield of 2%.

Automotive

Thinks the industrial space is going to do well in 2018. It goes with the whole global growth phenomena that is occurring. You are going to have a lot of demand from economies across the world. This is the kind of company that should be able to benefit from this. The stock is cheap on pretty much every metric you can look at. Nice dividend. They are buying back shares. Dividend yield of 2%.

Automotive
Ryan Modesto

Managing Partner, 5i Research...

PricePrice
$71.500
Owned Owned
Unknown

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