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  5. CXI: I have held SIS for a number of years and although I have enjoyed the dividend, the share price never seems to hold its momentum and drifts back to the low/mid teens where I bought it. [Currency Exchange International Corp.]
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Q: I have held SIS for a number of years and although I have enjoyed the dividend, the share price never seems to hold its momentum and drifts back to the low/mid teens where I bought it. I like the dividends but value total return more. I have never owned WELL but have followed it based on your recommendation. Can you rank the two and provide a short explanation as to your preference on the following metrics: 1) Management 2) Balance Sheet 3) Profitability 4) Long Term (5-10 yr) Return Potential and 5) Risk

I would prefer to hold just one of them.

Secondly, what is your analysis of CXI's quarter.

Many Thanks

Scott
Asked by Scott on September 15, 2023
5i Research Answer:

CXI comments are now posted. 

We would prefer WELL today, for future growth. We think management of each is solid, but WELL is perhaps more aggressive with deals and has big plans. This could of course backfire, but so far, so good. It aims to be a multi-billion dollar company. Insiders own good positions of each. WELL has a much stronger balance sheet currently, with net debt barely above 1X cash flow and SIS about 3.5X, even after its recent financing. SIS has been consistently profitable, with gross margins at 32% and net margins ~4%. WELL only recently turned profitable, with gross margins 53% but net margin still very low right now. Long term potential largely depends on acquisitions, but as noted we expect WELL to be far more active. Thus, we would side with it for growth potential. Its addressable market is also likely higher as the healthcare sector continues to adapt (finally) to technology. Risk also depends on deals. Right now WELL is stronger financially, but this could very well change with an aggressive large deal. SIS is still a 'product' company (vs services) and this can add risks to its business. We would side with WELL here. 

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