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  5. ATS: Hi, On his BNN appearance, Feb 13, Peter was very positive on the stock " We do consider it one of the best industrial stocks right now. [ATS Corporation]
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Q: Hi, On his BNN appearance, Feb 13, Peter was very positive on the stock " We do consider it one of the best industrial stocks right now." Peter also indicated having visited the facilities/plants and met the Management, at the time he owned a large chunk of the Co., while managing funds for a large Canadian institution. Stock has seen a phenomenal run over past 9 months (+65%) and YTD +30%. ATS also appears to have grown to a 7% weight in the 5iGrowth Portfolio.

We have taken a starter 1% position, over past 2 weeks, to complement Industrials in our portfolio.

Could you (Peter) kindly share your current view of the company, with respect to its management, valuation, debt and Growth prospects. Also, in light of such a strong run up in the share price, would you still be comfortable adding at current levels or wait for a pullback ( If it happens, at all ), for a long term investment ?

Thank You
Asked by rajeev on March 30, 2023
5i Research Answer:

With a mid-sized growth company, we typically see stock strength as confirmation of a theme rather than a concern. As ATS gets bigger, assuming nothing goes wrong, it will attract a wider field of new investors. With EPS likely to double from 2022 to 2024E, we would not consider 24X earnings that expensive. The balance sheet is still leveraged with $1B debt, likely 4X cash flow this year. Investors may be expecting a stock issue, but it doesn't do many. In 10 years the share count has only grown from 87.9M to 91.8M. But sales have tripled and earnings quadrupled in that time. These are more reasons to like it. So we like growth and management, and dislike (a little) the leverage and valuation. We would be fine adding. We can't comment on personal weightings, but as noted it is a big position in our growth portfolio.