Full episode: Market Call for Wednesday, June 19, 2019
Ryan Modesto, chief executive officer at 5I Research
Focus: Canadian small and mid-cap stocks
Recent earnings coming out of Canada were not particularly inspiring. Earnings growth for the TSX was down over five per cent year-over-year with only 39 per cent of companies reporting earnings above expectations. Of any sector in the TSX, technology looks to be one of the bright spots in the recent quarter and is the one we remain most interested in within Canada. While the sector is thin, there are numerous high-quality companies that are growing at fast rates. Additionally, many of these companies should be less impacted by the constant political headline risks as these companies tend to be global and have high margins, giving them flexibility to adapt to changing landscapes. If a slowdown continues, the technology sector might come into focus as investors look for companies that can grow in spite of a slowing global or domestic economy.
LIGHTSPEED POS (LSPD.TO)
Point of sale solutions and payment processing provider for retail and restaurant businesses. Lightspeed recently went public and they are one of the fastest growing companies on the TSX. Very large addressable market, recurring revenues and good user economics. Finally, the move into payments should improve revenue per user metrics.
LEON'S FURNITURE (LNF.TO)
This furniture retailer has a high market share in Canada but should roughly grow with GDP. While it is slower growth, LNF has deleveraged the balance sheet and is now in a position where they generate a healthy amount of free cash flow that can be diverted to dividend increases or share buybacks. Meanwhile, the stock trades at roughly 12.8 times forward earnings and offers a 3.7 per cent dividend yield.
BOYD GROUP INCOME FUND (BYD_u.TO)
Automotive collision and glass repair company that has been consolidating a fragmented industry for years now. Boyd has become effective at purchasing smaller service shops at good valuations and integrating best practices, allowing acquisitions to grow profitably to higher levels than they would have done on their own. Well-run company with growth potential through acquisitions.
PAST PICKS: May 24, 2018
- Then: $28.41
- Now: $15.21
- Return: -46%
- Total return: -44%
GREAT CANADIAN GAMING (GC.TO)
- Then: $50.25
- Now: $43.99
- Return: -12%
- Total return: -12%
ALIMENTATION COUCHE-TARD (ATDb.TO)
- Then: $54.00
- Now: $86.67
- Return: 62%
- Total return: 63%
Total return average: 2%
Balanced Equity Model Portfolio
Performance as of: May 31, 2019
- 1 month: -2.9% fund, -3.1% index
- 1 year: -10.1% fund, 3.03% index
- 3 years: 22.9% fund, 24.6% index
INDEX: S&P/TSX Total Return Composite
Returns from distributions, model portfolio
TOP 5 HOLDINGS AND WEIGHTINGS.
- Constellation Software: 7.5%
- CCL Industries: 5.8%
- CAE Inc: 5.7%
- Magna International: 4.9%
- WSP Global: 4.9%
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PERSONAL TWITTER: @5iRyan