Q: Microsoft's C$7.5 billion investment in Canada (over the next two years), part of a larger C$19 billion commitment through 2027 may benefit some Canadian companies like GIB at 52 wk lows and CLS at 52 week highs.
I like beaten up dogs like GIB vs. high flyers.
What is your opinion of GIB these days.
Thank you
I like beaten up dogs like GIB vs. high flyers.
What is your opinion of GIB these days.
Thank you
5i Research Answer:
GIB.A has seen a slight improvement in its share momentum over the past month, and it is essentially flat from nearly three years ago. It pays a small yield of 0.6%, sales and earnings estimates continue to rise, but the growth rate has slowed slightly. It trades at a reasonable valuation now (14X forward earnings), and it is quite active in its share buyback policy. From a fundamental standpoint, we think it is attractive here, given the reasonable valuation, high buyback yield, and reasonable forward earnings growth estiamtes (~8%). It may not grow exceptionally fast, but we think it can do well and is priced reasonably here.