retiredcf wrote: Here's the full article which caught my eye. Long term investor and was able to initiate a position this afternoon at $1.33 which is not only below the recent financing level, but almost 6% below AEP's SP when reviewed by the crew at Keystone Financial. Have a lot of time for those guys and will see them tomorrow at the Toronto MoneyShow. GLTA
Calling it “an impressive growth story,” Raymond James analyst Daryl Swetlishoff initiated coverage of Atlas Engineered Products Ltd. with a “strong buy” rating, seeing its five-year revenue and ROTC CAGR [return on total capital compound annual growth rate] of 34 per cent and 60 per cent, respectively, “backstopped” by more than 300-per-cent share price returns.
“We regard Atlas as well positioned to capitalize on improving Canadian housing fundamentals with revenue 92 per cent correlated with housing starts,” he said. “We also have conviction the combination of taking truss and wall panel market share, supported by attractive M&A and organic growth opportunities will support revenue and margin growth (along with multiple expansion) over time. While not included in our estimates, aggregating the impacts of potential M&A and fully realizing on the automation strategy has potential to bring theoretical equity value north of $4.50 pr share. With a pristine balance sheet, growing FCF (supported by its maintenance capex-light model) and a valuation near the low point of its historic range, we regard Atlas as an emerging serial compounder and encourage investors to add to positions.”
Calling it the “consolidator of choice in highly fragmented truss space” with “strong” leverage to improving Canadian housing fundamentals as well as referring to it as “a well-oiled, scalable M&A machine,” Mr. Swetlishoff set a $2.25 target for the Nanaimo, B.C.-based company’s shares, seeing an “attractive” valuation and “favourable risk/reward scenario.” The average on the Street is currently $2.39.
“Atlas shares are currently trading at 10.0 times and 4.9 times our 2024 and 2025 EV/EBITDA estimates (respectively) which represents a significant discount compared to the 2025 peer group average of 8.8 times and its historical trading range of 4 times to 10 times,” he said. “Given the strong organic and M&A growth prospects, we believe the current valuation presents a favorable risk-reward scenario. We highlight the 270 basis points increase in gross margins from 2018 to 2023, despite volatile market conditions. During this period, AEP has also quadrupled its revenue at a remarkable 34-per-cent CAGR. Since going public in June 2017, AEP shares have returned over 300 per cent, outperforming the TSX Composite (49 per cent), TSX Venture (down 32 per cent), and S&P 500 (up 124 per cent).”