Q: Hi, I've held ATS for a while to see a nice gain and now back to even. . I'm debating on adding, selling or just holding. What would be your recommendation today and why?
What other Canadian stocks in the sector do you see as better if moving on? Thanks
What other Canadian stocks in the sector do you see as better if moving on? Thanks
5i Research Answer:
ATS operates in a cyclical industry, and while it's seen good growth over the years, next year's guidance is fairly weak. We think the name has recovery potential, but investors are concerned about the decline in its backlog. It's currently trading in-line with its historical price-to-sales and EV/EBITDA multiples, however, on a P/E basis it is at a slight discount. We would be comfortable holding here, or adding to the name in the low $40s.
While we feel that ATS has good long-term potential, investors may need to be patient in the near-term or intermediate-term, however, for an alternate name, we like HPS.A.