Q: On October 26 you indicated “ The stock has fallen the most in 16 years. We think, at 8X earnings, it can be kept and we would caution against a quick reaction in a downturn that has already happened. But we think it can be 'targetted' for elimination as the stock settles in. It was almost taken over a while back (the deal was blocked) so there is always that possibility. But it is hard to endorse on that alone. “
Have your views about this stock changed or you still think that it may be considered for elimination. I am almost breaking even (small loss).
Thank you
Have your views about this stock changed or you still think that it may be considered for elimination. I am almost breaking even (small loss).
Thank you
5i Research Answer:
ARE has had a very big bounce following its weakness, with the markets helping out as well. Generally, in a rally, small cap and more-risky stocks tend to do better (leverage to earnings). ARE remains cheap even after the rally and is now debt free. But..it is small, and cash flow has been negative for three years. EPS is expected to drop sharply this year. Considering its mixed history of performance, we would still be comfortable selling it and moving on to something with more consistency (WSP, TFII) or more growth potential (ATS, LMN).