Review of CGI Inc.

APR 25, 2024 - GIBA is one of the largest IT consulting firms in the world and one of Canada’s most successful publicly traded companies. GIBA has been a long-term compounder with a 10-year annualized growth rate of 14.65%. While GIBA competes in a crowded space with some of the largest international companies such as Accenture and IBM, GIBA has been steadily able to grow its business by winning large contracts and acquiring companies adding to its portfolio of business. GIBA is a stable business that has a large backlog, generates high cash flows, and buys back shares. We are initiating coverage at a ‘B+.’

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Q: I was doing a high level look at my portfolio in terms of recent vs 3, 5, and 10 yr CAGR and saw what I expected from stellar performers like CSU, TRI, WSP, IFC and DSG. What surprised me was seemingly declining longer term performance (ie pre-dating interest rate changes) from FTS, QSR, GIB.A, and EIF. The balance of the portfolio is holding it’s own or is cyclical or I can see a path to renewed growth/performance. Are the four named really lagging or am I looking at the wrong metrics? If you agree they might be considered to be faltering versus past performance can you suggest “growthier” replacements without going too far out the risk scale? Thank you.

Read Answer Asked by Stephen R. on July 23, 2024

Q: Questions on CTS:

How similar is its business to GIB.A, if at all? Does it make sense to hold both?

Do you have a good feel for its resiliency (i.e. competition and poor economy)?

Is there any vision or plan on this company growing going forward?

Are there odds of a takeover in the future?

Read Answer Asked by James on July 19, 2024

Q: Could you please compare the key financial metrics of OTEX vs ENGH and tell me which one you feel is the better long term hold and why. Finally, is there a canadian tech company you prefer to either of these 2?

Many Thanks
Scott

Read Answer Asked by Scott on July 17, 2024