BMO - Top Picks for 2019January 14, 2019 BMO’s equity research department recently released its top Canadian stock picks for 2019.
Making the list are 24 stocks across four categories: growth stocks, growth at a reasonable price (GARP) stocks, value stocks and stocks with potential catalysts.
Here are the investment rationales for each of the recommendations.
Three growth stock recommendations
Boyd Group Income Fund (BYD.UN-T)
Winnipeg-based Boyd Group operates a network of non-franchised collision repair centres across North America, mostly in the U.S., under banners such as Boyd Autobody & Glass, Gerber Collision & Glass and Assured Automotive. Boyd also operates auto glass shops across 34 U.S. states under banners such as Glass America, Auto Glass Service, and Auto Glass Authority. Over 90 per cent of its revenue is generated through insurance carriers such as State Farm Insurance, Allstate, and Geico.
Special situations analyst Jonathan Lamers has an “outperform” recommendation and target price of $135 based on a forward EV/EBITDA [enterprise value to earnings before interest, taxes, depreciation and amortization] multiple of 14 times.
Mr. Lamers notes, “We expect annual earnings growth in the mid-teens to 20 per cent range from self-financed, small acquisitions and modest same-store sales growth.” He anticipates the company will also benefit from a lower Canadian dollar relative to the greenback. The majority of Boyd’s revenue is from the U.S.