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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Thinking about switching from Saputo (SAP, about a 2.5% position) to A&W. I'm a little under water on Saputo, I can use for a capital loss.

SAP is trading at around a 20-21x multiple, so in my opinion, chances of it running $3 or $4+ more in the short term is fairly limited. Plus, the Saputo family has a 34% voting interest so, I'm guessing, chances of a takeover are fairly limited in the immediate future.

These are the reason's I wouldn't mind selling SAP for a more efficient use of my funds. However, I am having difficulty valuing AW.UN in comparison with SAP. I like AW.UN's monthly dividend. I like the fact that it seems to be a well run business. And I like the fact its just about the perfect size for a large number of players in the food services industry to take them out. However, like I said, I am having difficulty valuing AW.UN. I'm wondering if you can help me out? Is it cheap, fairly valued, or expensive against the backdrop of its growth profile?

Thanks.

John
Read Answer Asked by john on November 18, 2015
Q: Hi Peter and Ryan, What would be an appropriate Weighted Average Cost of Capital (WACC) to use to discount GIL's future free cash flows to firm? I am getting a very low WACC estimate of only 4.41% primarily because GIL's Beta is only 0.39. My other assumptions are as follows,

Risk free rate 2.4%
Market risk premium 5.75%
Beta 0.39
2.4% + (5.75% * 0.39) = 4.64%
Resulting cost of Equity 4.64%
Equity weighting 92.1%
After-tax cost of debt 1.7%
Debt weighting 7.9%
(4.64% * 0.921) + (1.7% * 0.079) = 4.41%
Resulting WACC 4.41%

To me WACC of only 4.41% seems too low. Where do I go wrong with above calculation?
Read Answer Asked by RAJITH on November 18, 2015
Q: Hi Peter,
The results out today from GRC look quite spectacular, at least on the surface. I have a small position, and added some more today. I wanted to get your thoughts on 2 things: the sustainability of the 10% dividend, and method(s) to estimate fair value for the shares, given that revenue and earnings will likely be quite volatile and unpredictable over the next months/years.
Thanks for your excellent service!
Read Answer Asked by Ed on November 17, 2015
Q: Is it not incumbent for any firm such as SeekingAlpha making accusations to have solid evidence prior to making accusations in support of short selling? Should there not be recourse against both the accuser and possibly the promotors of a class action law suit. If there is no back up evidence of wrong doing, shareowners should consider legal action? How reputable is SeekingAlpha?

Can you provide guidance as to whether I should take my losses in stride?

Thank you

Read Answer Asked by Martin on November 16, 2015
Q: Could I have your thoughts on the latest quarter. Thanks.
Read Answer Asked by wendy on November 16, 2015
Q: Intrinsyc released Q3 yesterday and the results and outlook appear strong. The company was also named as a top 20 public tech company and is presenting at next weeks CIX Tech Investor conference in Toronto. What are you thoughts on ITC as a micro cap tech opportunity given the company's strong balance sheet.
Read Answer Asked by Charles on November 16, 2015
Q: I like the long term potential within the Uranium sector for future electricity generation. I'm looking to invest in the sector for the long term ( at least 5 yrs +) as I believe there is a forecasted supply shortfall emerging between 2018-2020 that could last many years. BAN looks interesting but at $0.03/share also looks very risky with about $8 mill in debt. I'm also looking at Denison and UEX with no debt. Is BAN a survivor for the next upcycle? What do you think of a basket of these juniors?
Thank-you.
Read Answer Asked by Chris on November 14, 2015
Q: UrtheCast Corp released their third quarter results this week. Would you please provide your comments. Did the meet expectations and would you recommend continuing to hold this stock? Thanks
Read Answer Asked by Gordon on November 14, 2015
Q: Hey Peter & Team,

Trying to get a handle on Merus. I bought a full position @ $1.94 in Jan 2015. Sold 50% at $3.26 in July. Today it is trading @ $1.55.

The street sentiments appear to be fluctuating quite a bit... Early Oct it carried a Strong Buy recommendation from multiple sources with target prices ranging between $3.25 & $4.25. 3 weeks later Mackie & Scotia reduced their targets from $4.25 - $2.70.

Are you able to shed any light on MSL and what we could expect moving forward?

Thanks for all you do

Gord

Read Answer Asked by Gord on November 14, 2015
Q: Hey Peter & Team,

I took a look at the recent reporting as of Nov 5. From what I can tell, poor crop expectations, resource prices and related uncertainty,regional economic uncertainty surrounding oil prices, which primarily impacted new equipment demand in the Alberta construction market, the increased Canadian dollar cost of new equipment due to appreciation in the US dollar are all creating a significant head winds for CVL.

I am in at $24.20 (4% position)

From what i can see my options are to cut the loses and put this capital to work elsewhere or, hang tough and wait it out.

my questions...

Would you advise I move or hang tough?

ps... dividend is very good... do you think it is safe?

Thanks for all you do

Gord
Read Answer Asked by Gord on November 13, 2015
Q: Appreciate your views on results and the announcement of a stategic review.
Thanks
john
Read Answer Asked by John on November 12, 2015
Q: May I have your assessment of Stingray's latest quarterly results. Do you see this company as suitable for a small position in a growth portfolio?
Thanks, Tim.
Read Answer Asked by tim on November 12, 2015
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