Investment Q&A

Q: Premium Brands Holdings (PBH) is part of 5i’s Balanced Portfolio. It reported today and appears to have met or slightly exceeded analyst range of estimates both on EPS and Revenues.

It has completed its sale and leaseback of its Tennessee Sandwich Plant, and used the proceeds to repay a $172 debenture that matured in April, slightly reducing its total debt to EBITDA to 4.2:1 from 4:6:1 for the quarter.

They have also posted a 6 page letter from the CEO to Shareholders entitled “The Future of Food is the Past”

It would be appreciated if you could review both the results and the letter; and provide your comments, as well as sentiment on the company/strategy.

Thank-you!

Q: Thought on the quarter please?Thx

Q: This morning a guest on BNN recommended Premium Brands. Their new revenue generators with Costco sound promising. However they seem to have a lot of debt and a very high dividend payout ratio.

Do you think their cash flow covers their debt and is the payout ratio really at 128%?

Thanks for all your help.

Mike

Q: Hi 5i
A question dated July 23 had this portion of an analyst's opinion on PBH:


Assuming that 1) the Distribution Group is sold at a reasonable valuation and 2) the "new" PBH is re-rated back up to a trading range of 12-13x (i.e., historical ten-year average is ~12.5x; we are using 9.0x to derive our June 2026 target price of $140), we think that a hypothetical divestiture and subsequent debt repayment implies a share price anywhere between $205 to $225 at the end of 2026, ~50-60% above our current $140 target.
~~~~~~~~~~~~~~~~~

Does this defy logic, gravity or both? Can a stock that has been dead money for more than 5 years more than double in a year and a half? The $140 target seems optimistic, but over $200 is mind boggling.

Thanks,
Greg

Q: What are your thoughts on PBH? TD released a research report on Friday, increasing its target price from $120 to $140 based on a stronger 2nd half of 2025. Buried in the report was the possibility of PBH divesting its Distribution Group and using the money to deleverage; in doing this, TD sees an implied share value of $205 to $225. See TD's comments below. Do you see the current price as a good entry point for PBH?

Which should drive significant deleveraging and could push the share price to $205-
225 by YE2026. Should PBH divest its Distribution Group, we think that PBH may first consider using the proceeds for debt reduction to both improve balance sheet flexibility and realize meaningful interest savings (i.e., ~75% of PBH's interest-bearing debt is floating rate), which should push total funded debt leverage down to 1.5x by the end of 2026, versus our current estimate of 2.5x. Assuming that 1) the Distribution Group is sold at a reasonable valuation and 2) the "new" PBH is re-rated back up to a trading range of 12-13x (i.e., historical ten-year average is ~12.5x; we are using 9.0x to derive our June 2026 target price of $140), we think that a hypothetical divestiture and subsequent debt repayment implies a share price anywhere between $205 to $225 at the end of 2026, ~50-60% above our current $140 target.

Q: Hello, can I have your top ten list of consumer stocks, Canadian or CDRs, based on projected total return (share price plus dividends, if applicable), for a 5+ years holding period? Thanks!

Q: I hold PBH (0.8% position) and COST (1.5%), and I realize that consolidating them is prudent. COST has been a very solid performer over time, but PBH has been performing quite well recently, after a couple of years where the share price was on a downward trajectory.

I understand each company has its attributes: with a time horizon of five years, in terms of share price appreciation, which is poised for better growth?

Q: Good morning, As a retired investor who can handle moderate risk I'm looking to add to my consumer staples holdings in an RRSP, for both growth and a dividend. My only current holding in this sector is Proctor & Gamble (PG). What would be your top 3 picks in Canada and top 3 picks in the US, ranked please, for a new consumer staples holding?

Q: Hi Peter &Staff

Switched from PBH to PRMB months ago (thank you) and have done well .PRMB falling daily and analysts have high targets for PBH due to expansion- time to switch back or not)

Thanks for all you
Dennis

Q: I am considering consolidating some of the listed companies because I have small positions in them. Do you have 2 or 3 favorites for a long term hold.

Q: Hi. Of the 6 listed companies, which 3 are your favorites for a long term hold. I am trying to consolidate smaller positions so that I have less stocks.

Q: Hi Peter and 5i Team,

Realizing that there are a number of catalysts that 'could' boost the share price of PBH, we're concerned that it will take too long. It was purchased several years ago for a TFSA at an (ugh) average cost of $122. The last time I looked, it was trading at $80.23.
Even with the dividends received (thank goodness for dividends in this case), we are still down $17,300.

Here's the question: Even with all the positive catalysts going forward, do you think that the share price will increase enough to at least break even when accounting for dividends? Or do you think that we should swallow the loss and move to something else that has a more attractive valuation and greater upside?

As always, your comments and insights are very helpful.

Q: Why the drop in PBH today ?

Q: Hi 5i, may I have your thoughts on the quarter and forward guidance. I've been waiting patiently, as have you, for their capital spending to see results. Thx.

Q: looking for an entry point for a half or quarter position, for dividend income and some capital growth, 3 years hold
thanks

Michael

Q: I have half positions of these three stocks: QSR, PBH, & LNF. PBH is underwater. Are these good stocks to own long term? They haven't really done much in the last few years. Or on this pullback, make them full positions for their div and possible future growth? Do you have other favourites in Consumer stocks? YOUR THOUGHTS PLEASE. Thanks.

Q: Currently hold PBH and considering selling. Know you recently rated as a hold for the three year period. For a better total return,over the next three years, would you sell PBH and buy one of ATH, CJT, MG, NPI, NXR.UN, TCL.A, or VHI. Please rank these stocks for purchasing. Thanks

Q: I'm holding the above in a RSP and the above stocks are quite down. Given the current environmnet, is it time to sell them? today, rather than last week!

Q: I've held Premium Brands Holdings Corporation (PBH) for eight years with minimal returns. Given its recent challenges, such as weaker Canadian sales and a premium valuation relative to peers, I’m considering switching to Alimentation Couche-Tard (ATD) for better long-term growth potential. ATD seems to offer a more resilient business model, steady earnings growth, and strategic acquisition opportunities, like the potential 7-Eleven deal. What’s your view on the rationale for trading PBH for ATD and the timing? PBH is forecasting stronger growth however rarely materializes... Does ATD’s scale, diversification, and growth trajectory make it a stronger candidate for long-term value creation, or should I hold PBH given its U.S. expansion plans and historical dividend growth? Welcome hearing 5i's insight especially considering PBH's pop today resulting from positive earnings report. Thank you!

Q: Thoughts on the quarter please?

THX