Q: What are your thoughts on this company. I am looking to invest a smaller portion initially for a longer term hold. It has manufacturing facilities in both Canada and the U,S, which should shield it from tariffs and operations seem to have improved in the last few years.
Thank you
David
Thank you
David
5i Research Answer:
The stock is cheap at 9X earnings and pays a good dividend. Earnings though have been quite volatile and we note earnings per share are below levels of 10 years ago, even with recent improvements. Debt is nearly three times' cash flow and this adds risk. It is NOT a high growth business but management has handled the decline relatively well. Jerry Zucker Trust owns 25%. We do think it is the type of stock that could be privatized. It is not likely to get a high valuation in the market due to its small size and weak industry outlook. It only has one analyst and the stock is 60% below its IPO price of nearly 20 years ago. Risks here are higher we think than most expect, even at a low multiple. We would not find it hugely attractive today.