On the heels of a significant rally that was actually limited to a handful of stocks, no one quite knows where the market is going these days. Some think we may be entering the dreaded “stock picker’s market:
“We may be exiting the best S&P earnings per share era, but we are likely entering the best stock picker’s market in our careers,” Savita Subramanian, an equity and quant strategist at BofA Securities told Kiplinger recently. “We recommend being invested in equities but selectively.”
So how to be selective? Read Cantech Letter, which gives you access to Canada’s best analysts, for free. Here’s what two of them think are good buys right now.
After what he described as “unexpectedly strong” second quarter results, National Bank Financial analyst Richard Tse remains bullish on Altus Group (Altus Group Stock Quote, Chart, News, Analysts, Financials TSX:AIF)
On August 10, AIF reported its Q2, 2023 results. The company posted a profit of $11.9-million on revenue of $205.2-million, a topline that was down 0.6 per cent compared to the same period last year.
In a research update to clients August 10, Tse maintained his “Outperform” rating and one-year price target of $65.00 on Altus Group, implying a return of 49.8 per cent at the time of publication.
Toronto-based Altus produces asset and fund intelligence for commercial real estate clients and has business across North America.
Tse thinks Altus will post Adjusted EBITDA of $147.5-million on revenue of $803.6-million in fiscal 2023. He expects those numbers will improve to EBITDA of $200.2-million on a topline of $904.8-million the following year.
“Bottom line,” Tse concluded, “Altus continues to make progress on expanding its addressable market and growth opportunity through a mix of strategic M&A and organic initiatives, and with the notable valuation driving segment of Altus Analytics back on track, that supports our view for a valuation re-rating (upwards).”
Over at Echelon Capital Markets, analyst Mike Stevens has launched coverage of Decisive Dividend Corp (Decisive Dividend Corp Stock Quote, Chart, News, Analysts, Financials TSXV:DE).
In a report to clients August 18, Stevens initiated coverage of DE with a “Buy” rating and a one-year price target of $10.75, representing a return of 45 per cent at the time of publication.
Founded in 2012, Kelowna-based Decisive Dividend Corp acquires manufacturing-based businesses in diverse spaces such as wood stoves, truck components and road maintenance.
Stevens says the company has a winning and repeatable M&A strategy.
“Decisive’s disciplined buy, build, and hold M&A strategy has acquired ~$97M in enterprise value (EV) across 11 manufacturing businesses at immediately accretive acquisition multiples (average of 3.9x EV/EBITDA) before seeking to reinvigorate growth through strategic investments. The Company’s founder-friendly core tenets and access to capital have favourably positioned Decisive as an attractive acquirer,” the analyst said. “This, coupled with surging macro tailwinds, as ~56% of Canada’s baby boomer business owners plan to exit over the next five years (representing $1.5T+ worth of assets) (CFIB), helps forge a rich pipeline of opportunities to flow for many years to come. With our headline PT derived from a strictly organic forecast outlook (i.e., assuming no further acquisitions), our more plausible M&A Scenarios point to current per share valuations of $12.63/$14.53 across our Base/Bull cases, implying considerable upside beyond our PT.”
Stevens thinks DE will post Adjusted EBITDA of $24.4-million on revenue of $139.4-million in fiscal 2023. He expects those numbers will improve to EBITDA of $32.2-million on a topline of $168.2-million the following year.