RE:Keystone Financial podcast
Possibleidiot01 wrote: https://keystocks.com/media_center/stock-talk-podcast-episode-254/
In this Week's Show: - Canada's capital gains tax is going up!
- Our take on A&W Revenue Royalties Income Fund (AW.UN:TSX)!
- Dissecting TD's (TD:TSX|NYSE) earnings and mortgage changes!
- Should you invest in TerraVest (TVK:TSX) after massive run in price?
I listened to the podcast. This company is a growth by acquisition company and that is the value proposition. They buy companies at cheap multiples, trim costs and increase eps. Further, they increase their moat by buying businesses from owners that are retiring, almagamate them into their existing business and increase their service offerings. They have a dominant market share in their products and services.
The Ceo is young and eager to see the business continue to grow for years to come. The company makes about 1 acquisition per year and should continue in the future.
This company has been mispriced for almost a decade even though it's still delivered 20% + returns for over a decade. The current multiples are more fair than it was only a year ago but that doesn't make it expensive. The value proposition is not in their organic growth but in their returns on equity for the acquisitions they make.
For each $1 of equity paid for acquisitions, they can generate about 44 cents in after tax income. That's a 44% after tax return on equity when they acquire a new business.
I think it was Albert Einstein who said, "compound interest is the 8th wonder of the world. "