PSI is a leading global provider of data management systems for oil and gas drilling. Therefore, the company’s operations are heavily impacted by commodity prices, which drive drilling activity. PSI has a near-term tailwind driven by strong oil and gas prices due to the Iran War, which has pushed commodity prices higher and is expected to drive additional drilling activity. Artificial intelligence is also driving increased demand for both power and data, both of which benefit PSI over time. The company possesses an 8-year track record of outgrowing the industry despite the continued headwind of declining rig count over the past ten years. With a clean balance sheet and disciplined capital allocation policies that prioritize organic growth and capital returns, PSI is not the type of high-growth name that could be a life-changing opportunity, but investors can consider PSI as a low-risk dividend cash cow with a high certainty of growing its topline by 3%–5% organically over time. We are maintaining our rating at a B.

The company’s business model is highly sustainable and durable, given the fact that BDGI has managed to compound shareholder capital at around 16% per year on average over the last twenty years despite operating in an industry that is widely considered cyclical and “commodity-like” with little differentiation. The company’s business is expected to benefit from the long-term tailwind of sustained demand from infrastructure investments (such as Artificial Intelligence infrastructure), though in the short term, growth could be lumpy due to macro factors. BDGI has consistently reinvested capital back into the business to expand its fleet and network branches, as well as add adjacent services to leverage its fixed-cost business model. BDGI did experience some tariff uncertainty, which temporarily increased capital spending, but it is still manageable. We think BDGI is trading at a fair valuation and would be willing to upgrade if the company continues to sustain solid execution and the macro picture improves. For now, we are maintaining our rating at ‘B’.

MTY operates a great business model as a franchisor that generates stable, asset light stream of cash flow, which historically used to fund acquisitions. MTY possesses a diversified portfolio targeting different niches in the restaurant industry such as pizza, Asian food, café, etc. Despite a reported revenue growth of around 3% for FY2025, the growth was primarily from a one-time recognition of unredeemed gift card balances - gift card breakage income, making the revenue and earnings appear to be stronger than expected. Excluding that special item, MTY’s revenue is basically flat year over year. In addition, same-store sales and store count growth have been quite weak in recent quarters. The good news here is MTY’s balance sheet is now in good shape and management has been active in share buyback and raising dividends at the fastest pace. Despite attractive capital returns and cheap valuation, we think MTY is cheap for a reason as growth from organic source and acquisitions remain a big concern here. We are downgrading our rating by one notch to ‘B-’ given these factors.