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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: 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: Your research report on Gildan states

"Gildan has significant exposure to cotton prices, which can have a big
impact on the bottom line. The company says fluctuations and volatility
in the price of cotton and polyester fibres is a big risk."

Is there any reason the company would not hedge these risks through cotton futures or even oil futures (for the polyester price risk)? It seems to me that this is exactly why these futures exist, to serve the producers and smooth their earnings cycles. Thanks, J.
Read Answer Asked by Jeff on October 26, 2015
Q: Hi guys,

Would it be possible to get some help regarding how many shares, of the 4 million, Glenn Chamandy has sold already in his share disposition plan?

CIBC's Investor's Edge has consensus 2016 estimates at $1.91US which translates to $2.51 Canadian. The shares, here, look pretty attractive to me, trading at just over 15x 2016 estimated earnings. However, I'm not sure I want to add to my position if Mr. Chamandy still has several more weeks of selling ahead of him.

Thanks for your help.

John
Read Answer Asked by john on October 22, 2015
Q: Peter & Team, I took a half position in advance of the quarter report in light of chart strength and 5i's B+ rating. From the conference call, I can see a mis-step or two that are quarter specific, but I liked the positive growth. Would you add the other half here on this 8% pull back or have I missed this growth story and best to sell and move on? Is this still B+ rated and is the growth story still intact?
Thank you. Keith
Read Answer Asked by Keith on July 31, 2015
Q: I currently have 16% of my portfolio in Consumer Discretionary (CCL.B, DHX.B, DOL, GIL) and about 5% in Utilities (BEP.UN). I was thinking of selling Gildan (GIL) and using proceeds for Interpipeline (IPL).

What are your thoughts of this change based on future growth outlook and share appreciation? Am I selling a good performing stock and trying to catch a falling knife?
Read Answer Asked by Mike on July 27, 2015
Q: Hi guys,
I am looking at buying names from your growth portfolio. I prefer more stable revenue/earnings/guidance as opposed to "surprises". Have any recommendations?
Also, a quick thought on dollarama or gildan, I was looking to buy either for some time on a pull back, but I might just buy some now for exposure.
Thank you
Read Answer Asked by Marie on July 16, 2015
Q: Hi Peter and the Team,

CBC Radio had an interesting segment this morning that dealt with the aftermath of the Bangladesh clothing factory disaster. I was pleased to see that Gildan takes their corporate responsibility very seriously as outlined in this link:

http://www.cbc.ca/radio/thecurrent/statements-from-canadian-companies-on-their-efforts-in-the-aftermath-of-the-rana-factory-disaster-1.3045375

Read Answer Asked by Jerry on April 24, 2015
Q: Good Morning Peter and the 5i Team,

A comment regarding Gildan: I took my grandson to the Halton Skills competition in Milton this morning, and was pleased to see that all the t-shirts supplied to the participants were in large Gildan boxes. Owning GIL, thanks to the superb advice from 5i, has been most rewarding! Thanks for such timely recommendations.
Read Answer Asked by Jerry on April 09, 2015
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