It's been a tough year for a lot of great canadian stocks, just to name a few, here's some superstocks that have biten the dust over the last year. All Quebec stocks, except for Enghouse Systems.
MTY Food Group
A lot of people look at them and say: "It's cheaper than it's been for years! Let's buy them!"
Well, usually, when it's cheap, it's cheap for a reason. Like food in groceries. When it's cheap, it's because it's becoming to be rotten and the grocery prefers to give you a 30% bargain than to put that shit in the trash.
And you, fucking genius, buy that cheap food saying: "Wow, it's cheaper than it's been for years!" and then, you get cancer.
Let's take a look at a two of these stocks.
First of all, Richelieu grows by 2-3% each quarter, which is very low for a stock that was sold no so long ago for 25 times current earnings and more than 22 times next year's earnings. How could you pay that price when you can get some stocks that grow by 10% every year for 15 times forward earnings?
Second, Enghouse Systems. The growth there is similar to Richelieu. How could you pay 25 times next year's earnings for such a low growth?
Both stocks have a very low debt however, which give them a lot of flexibility to pursue any acquisition. But come on, who the fuck would think it would be a good idea to buy something when the market is at an all-time high, or so? Overpaying is always a bad idea.
In that regard, I don't think there's any momentum for Richelieu and Enghouse. Their valuation is still moderately high and the market is expensive. So, they probably won't start to grow a lot again without any acquisition. And any acquisition would probably be pricey.
I look elsewehere for an occasion. But they're great stocks anyway.
I don't like how Savaria executives manage their company. They always fucking dilute the float and their payout ratio is very high. That's stupid. Very few company that grow a lot act that way because it's simply a crazy fucking way to manage a company. You may get a boner from their adjusted earnings, but I don't know any intelligent investor who would replicate that fucking model if they had to start a company.
The recent numbers of Lassonde aren't good at all. The company seems to have a lot of difficulty to sell their juices. In the long run, they may be back on track, but I bet it won't be a short-term ride.
And then, Dollarama and MTY... I like them, but my favorite is by far MTY. That stock is a constellation of brands. It's like a Valeant well-managed. I'm still convinced that this stock will at least double over the last 5 years. Perhaps it's gonna be hard for a year. Perhaps for two years. But the stock will sooner or later go back to it's traditional valuation.