Post by
kawagamajoe on Apr 12, 2016 8:52pm
Concordia A Top Stock Picks from James Telfser
From BNN
https://www.theglobeandmail.com/globe-investor/investment-ideas/three-top-stock-picks-from-aventines-james-telfser/article29593742/
It is hard to believe that Concordia is trading at the levels we see today, given what the business has transformed into over the past couple of years. This transformation has come through a greater geographical reach, product diversification, and also through significantly higher earnings. For example, their expected EBITDA for 2016 is expected to be $800-million, which compares to the 2014 EBITDA of $78-million, more than 10x higher. Given the acquisitions executed to achieve this growth, they currently have a large debt load, but it is manageable given the high-margin nature of the business. Aside from the leverage, this is a healthy, diversified business that is going to generate a significant amount of free cash flow. Their most recent quarter demonstrated the earnings power that is possible at Amdipharm Mercury, their most recent acquisition, which came in ahead of ours and most analysts’ expectations, a huge positive in our view. At 4x 2016 EPS, the stock is not reflecting the fundamentals, and we believe investors who can ride out the volatility will be rewarded at these levels.