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COMMENT
Market Outlook Inflation has to be on your radar, but he thinks it is transitory -- caused mostly by supply chain interruptions. Wage inflation seems to be more pronounced in the lower wage category, which likely needed it anyway. This means we will likely pay more for food service, for example. When production comes back up, he expects we will return to a deflationary market. The world is awash in liquidity which will cause prices in general to return. There are opportunities in many Canadian sectors such as health care, small mid-caps, lumber and other industrials. Yet these groups are producing record results.
Unknown
STRONG BUY
Even though lumber is a quarter of their business, utility pole replacement is a large part of their business along with railway ties. If you normalize lumber prices, the stock is trading at an all time bargain at 13x earnings, with lots of free cash flow and the company is buying back shares. They could boost the dividend if they wanted to and are looking at acquisitions. One of the highest quality stocks trading at great value. He owns it and would it to put it away.
misc industrial products
STRONG BUY
A very high quality company that is generating high margins and great cash flow. They have owned it a long time. Recent results showed margins were recovering. They have upgraded the quality of their wines allowing them to reach higher price points. Their estate winery business is booming and they are generating record retail sales. This should continue. It is really cheap here and the company is buying back large volumes. This is a great area to buy as there is very little downside here.
breweries / beverages
HOLD
They have owned this in the past. It went no where for decades. The maple syrup side, which they entered about six years has been a disappointment and has been volatile. A safe and boring company. Not a lot of downside. You can milk it for the dividend, but there is not much upside.
Consumer Products
BUY
Although it has not gone up as much as the high flyers, it has not gone down as much these days. Its growth has been by acquisition in the software management space. Very slow growth and there is a slow migration to on-going SAS recurring revenues. He loves their margins, however. It is trading in a fair range here. Unexciting, but a stable company.
computer software / processing
STRONG BUY
One of two he owns in the health care sector. Digitization within health care has only just begun. The last quarter beat expectations. They announced a large deal with Sun Life on mental health coaching. This alone could be $40 million in annual revenues. Things are going in the right direction and will exceed expectations next year. A very good entry point here.
Healthcare
STRONG BUY
An excellent entry point. They are now the biggest company in the institutional pharmacy space in Canada. They supply medication to long term care facilities. They have 23% of the market share in Canada. They only really have one competitor, Shoppers Drugmart, who are really focused on retail customers. The stock is really cheap here and a long runway ahead.
medical services