First stock in the clip. and two sets of comments. GLTA
https://www.bnn.ca/Video/player.aspx?vid=829176
Top Picks:
Enercare
Enercare (formerly Consumers Waterheater). It is a fast growing company in the business of sales/rentals of water heaters, HVAC units and submetering installations. Although the business is traditionally stable and predictable, it has had tremendous success growing. Its latest acquisition of Service Experts, which is a similar (although smaller) U.S. based competitor, has a lot of potential for organic growth. The purchase price was US$340 million and it is expected to be 25 percent accretive to 2016 distributable cash flow per share. It also lowers the payout ratio from 82 percent to 70 percent, which helps support the company’s current dividend of about 5.5 percent. Management sees substantial growth opportunities through integrating their own financing/rental business into the Service Experts current customer base. Currently Enercare rents 1.1 million units to customers, while Service experts rents zero. The rental business is the most profitable aspect of the business for Enercare. Pro forma the acquisition, it is expecting a 98 percent increase in revenue and a 16 percent increase in EBITDA. The company raised both equity and debt to finance the acquisition so we used the weakness created by the equity raise to buy the stock.
2016-03-15 TOP PICK Bruce Campbell (1)
Water heaters. This is under the theme of having something relatively safe with a dividend. Made a US acquisition which looks pretty awesome, looking like 25%-35% accretion over the next 12 months. They had to finance this with equity and debt. The backward PE looks expensive, but the forward PE looks pretty good. Think you can see 15%-20% in 12 months, before going back to a regular 5%-7% or something. Dividend yield of 5.44%.
Login to show your approval Login to show your disapproval / Be the first to comment
Price:
$15.550
Subject:
CANADIAN LARGE
Bias:
OPTIMISTIC
Owned:
Yes