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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: Howdy! The Kiki Delaney chapter in "Market Masters" has inspired me to invest more in Quebec-based equities. I already have BCE, CAE, CNR & GUD. Please rank the top 3 in this list (or other Quebec-based equities that I didn't list) to add right now purely on long-term (3-5 yrs) appreciation (value + dividends).
Thank you,
David L
Read Answer Asked by David on October 17, 2017
Q: I own MG and MTY in consumer cyclicals and contemplating adding another name among GIL, RCH, ZZZ or CTC.A. Please order them from best to worst as a solid complement to the two I already have, as part of an RRSP account with a 15+ years time frame. Please give a brief rationale and suggest another company if there is an obvious better choice. I note that the stock value of RCH is surprisingly stable on multi-year charts for a c. cyclical.
Read Answer Asked by Christian on September 05, 2017
Q: Hi Guys,

Inside my portfolio, my consumer cyclical weighting is over 20%, please rate best to worst;
GIL, MG, BYD.UN, TOY, AYA, CCL & NFI and on the U.S.A. side we have GPC, DIS & HD.
I would like to lower the % to 15%.
thanks,

Jim
Read Answer Asked by jim on June 26, 2017
Q: My question concerns a robust method to estimate free cash flow.I have been running some calculations as part of my investment process and I make use of Free Cash Flow extensively in my models.

Usually I just use Operating Cash Flow - average of last five years CapEx. However in many cases such as GIL there are large variations in working capital from one year to the next. Management can boost operating and free cash flow by reducing working capital in the short run. This is a one-off rather than permanent boost to cash flow and can give a misleading measure of sustainable cash flows. The opposite is also true and management can make short term investments.

Some authors recommend removing changes in working capital from the calculation and defining free cash flow as Post-tax profit + Depreciation and amortization - stay in business CapEx. The stay in business CapEx is then estimated as the greater of the average of last five years CapEx or 120% of depreciation. Sometimes this adjusted definition of Free Cash Flow is also called owner earnings or Cash Profits.

With respect to GIL this approach certainly seems to give a much better free cash flow figure, but I wonder if this is wishful thinking? Is a company that over five years or more has to constantly deplete its working capital really showing us that it actually has a higher CapEx requirement? I would appreciate your comments.
Read Answer Asked by Andrew on June 19, 2017
Q: I am overweight PBH (thanks 5i) and looking to sell half and purchase something else in the consumer sector. GIL looks like an interesting fit, however the risk associated with one customer having 18.2% share and no fixed contract seems a bit daunting. Do we know who this customer is - a retailer like Walmart or a wholesaler? Has thee been a long term association? Given the value of this customer to Gildan would they not put significant pressure on Gildan to reduce margins.
Thanks in advance for your answer and your excellent service
Read Answer Asked by mitchell on May 09, 2017
Q: Hi 5i: Re Gildan. I just logged on to ask about Gildan's drop today and I've read your response to the earlier Gildan question. I was concerned that Gildan was very exposed to a Trump attack, given that they changed their minds about buying American Apparel's US manufacturing facilities, and only bought rights to the brand. The news item I read on RBC Direct described the large layoffs in California and notes that Gildan employs thousands outside the US. The American Apparels "brand" is all about "American . . . .". Seems to me Gildan is very vulnerable; one might even say "asking for it"!. What do you think?



Read Answer Asked by Roland on February 06, 2017
Q: 3 months ago I purchased full positions in engh, kbl, gil and sj as value plays looking for growth. My thought is to give the companies 2 years to get back on track. Do you still consider these good companies and do you think they will become good stocks within my 2 years time frame? Thank you
Read Answer Asked by Richard on January 30, 2017
Q: Today's Financial Post has an article "American Apparel LLC said it had started to lay off staff on Monday, after Canadian apparel maker Gildan Activewear Inc withdrew its initial plan to acquire some of the bankrupt U.S. fashion retailer’s manufacturing operations."

Going forward, do you think this will affect the stock price which already seems to be on a downward trajectory?

Is there now a "Trump Effect" with some Canadian companies that have a sizeable US footprint like Gildan, among others?

Thanks in advance for the timely advice.
Read Answer Asked by Jerry on January 17, 2017
Q: I am sensing that Stella Jones may suffer as a result of the very real possibility of NAFTA disputes under a Trump presidency. I note that the stock price has been moving south lately. I am considering sale of my SJ stock and using the funds to add to my holdings in GIL. I would appreciate your comments.
Read Answer Asked by Dennis on January 05, 2017
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