Q: I'm curious about your support for Atco. Is it because it's inexpensive or is there something else going on here?
5i Research Answer:
ACO has been trading between a range of $35 to $55 over the past 10+ years, and for a company paying 5.2% yield, we feel this is not too bad. Its recent negative momentum has not been great, but it has ~$700M in cash, is profitable (with growing margins), and is priced well (with a price-to-book of less than 1.0X).
We do not believe the negative momentum will last forever, and in fact this is a standard movement in price relative to its sideways trading over the past ~10 years. Averaging down is not our favourite, but for income-focused stocks, capital appreciation is typically more limited than with balanced or growth names.