GDI integrated facility services (GDI.TO)

Medici is one of my favorite investment firms. Most of the times, we like the same companies. Also, they're not into bullshit marketing like that sexy girl who says she lost her job in 2011 and then turned 500 000$ into 1.5 million dollars while dancing like she's in a fucking club. How I hate these fucking pretty girls who know how weak are men. 

Anyway, most of the times I agree with Medici, but at first I didn't agree with them about GDI. That janitor company didn't have appealing numbers in the past, in my opinion. Also, I didn't see the future of such a company in a COVID environment where a lot of people work from home. Who needs to clean office spaces when they're empty? That company needs germs and not shit spots in the toilet to be able to survive. 

Well, given the recent results of the company, it looks like offices owners want to clean more than before. I'm not sure if I understand why it happens, but it happens. 

Apart from that, it's not a very sexy industry and I don't see how competition could be a threat for such a business. Actually, GDI is an integrator that buys competitors. So, they are the Couche-Tard of shit spots. 

I still have a doubt about the new work society after COVID. But apart from that, I think that it's a great company which is not too expensive that will remain relevant as long as there will be humans in shopping centers and work offices.  

Here's a few numbers:

FWD PE:  23

ROE: 18

Long term debt: Very reasonable

EPS 2015: 0,12$

EPS 2020: 2,12$

Between june 2020 and june 2021, revenues grew while EPS decreased a bit. However, it's still great given the fact that we went through apocalypse during that time.

A name to remember.

All 10 provinces

Being a supercanadian who has visited at least one city in each of all 10 provinces, I suppose that I’ve reached a level of wisdom that few people have reached. And that wisdom must be shared.

I must repeat that the only province that I dislike is still New Brunswick. The other 9 provinces had something that appeals to me, some more than the others, of course.

First of all, I declare that, on the architectural and cultural level, eastern provinces are more interesting than western provinces. For instance, cities from Manitoba to British Columbia are usually less beautiful than cities in the east. There are exceptions of course, but Halifax or St-John’s easily beat Calgary or Regina. Actually, Halifax and St-John’s are probably two of the most beautiful cities in Canada and they have a spirit that is not present everywhere in the country of Glass Tiger.

I still have beautiful places to see in Canada. For instance, I’d love to visit Cape Breton Island, some national parks in Nunavut and Yukon, I’d like to see Victoria which appeals to me a lot, I’d like to see Fundy Bay which is probably the only interesting thing in New-Brunswick. I haven’t seen Edmonton but I don’t think I need to see it before I die even if we learned at school that West Edmonton Mall was such an incredible shopping mall with water slides. I guess that the little boy inside of me is dead. 

However, the problem with North America is that it’s just one big uniform culture with 350 million people who speak only English (or Spanish in some parts of the States) and shop at Walmart. The only cultural shock you’ll get is if you come to Quebec and never heard people speaking French before. But apart from that, people from Quebec are exactly the same as you: they shop at the same places and they eat the same things. The biggest difference is that they understand you when you talk in English and you don’t understand them because you only know one language. But it’s just a matter of language. Apart from that, most of us want abortion for our females and don’t want murderers to be killed on the electric chair. 

Also, It’s impossible to eat a pangolin or a bat in North America and that’s what makes us all the same.

I dream of a country with dozen of different languages, religions and political regimes.

I dream of something like the Balkans in 1913. 

Intuit (INTU): A great company

Intuit (INTU) is an excellent example of the kind of company that everybody should follow. I've never been a shareholder, but I've followed that company for years. And one day, I might buy shares. 

It's a very simple company: they produce tax softwares for individuals, companies and accountants. Plus, they own Credit Karma (on which you can see your credit score). And today, we learn that they buy Mailchimp (a kind of Shopify) for 12 billion dollars. It's a huge acquisition. 

Here's what's great with this company:

First of all, it operates in a boring industry where fad has absolutely no importance (contrary to clothes, to restaurants, to technology). Nobody talks about trends related to tax software. Then, it's a dominant company. It's not a monopoly, but it's a bit like Microsoft: it's the biggest in the industry. 

Everybody or so buys such a software every year. As the population grows, that company has more and more customers. 

Intuit has a very small debt. Their cash flows are growing, year after year, like very few companies can do (EPS growth is good, but it doesn't show everything while cash flow growth is more revealing of the greatness of a company). 

Plus, their profits margins are great (21%) and their ROE is 27. Very few companies have that kind of margins and ROE. 

To see how great it is, you have to analyze about 100 companies. Then, you'll see that Intuit is among the best 5%. 

All you have to decide is if 40 times next year's earnings is too expensive for you. 

The impact of a catastrophe on the stock market

Today, it's been exactly 20 years since september 11th, 2001. I won't tell where I was or what I was eating because nobody cares. 

However, I think that it's important to remember what happened to the stock market. Because, sooner or later, a similar event may happen. And the reaction of the market may also be similar.

Here's a chart about what happened between august 31th and december 31th (2001). 

On the chart, we can see the S&P and one of the biggest canadian companies (Royal Bank) and one of the biggest american companies (Microsoft).

First, the S&P was down about 10% right after the explosion of the towers. At the last day of the year, the market was up by about 26% (from september 11th to december 31th). The variation of Microsoft and Royal Bank is less impressive, which shows probably that blue chips are less affected by panics than small or medium caps. That's my personal hypothesis. I may be wrong.

Actually, we don't even have to think about 9/11 because COVID had much more impact on the market about one year and a half ago. 

Fact is that so far, there's not a single catastrophe that had a negative impact on the market in the long term. Of course, catastrophes may have a huge impact on certain sectors of the economy, but when you have a diversified portfolio or you invest on the S&P500, you always recover and, most of the times, the recovery is quick. 

Next step: The east

I'll complete my visit of Canada in a few days by visiting Halifax and St-John's (Newfoundland). These two cities are very attractive to me. Even though I've never been there, I expect that at least one of these two will be one of my favorite places in Canada. 

The only province I've never visited so far is Nova Scotia. So, by visiting Halifax, I'll be able to claim with a lot of pride and pretention that I've visited all 10 provinces. Is it an achievement? I don't know. Probably.

What will be my next step after that? I don't know. Everything depends on COVID. But probably that I'll wait to visit the three territories. COVID or not COVID, I'll need a real adventure soon. So, I'll probably chose among the countries where it's not too complicated to penetrate. Something like Mexico. 

Anyway, next trip won't happen before Christmas time. Maybe we'll all be dead because of Delta Variant by then. 

So, maybe making plans is a waste of time right now. I should enjoy my last weeks alive.

Seeking Alpha and Stockchase

Is it me or you now have to pay to see everything that's written on Stockchase? Actually, you can see a part of the information without paying, but you quickly come to an end of what's free. 

Maybe I'm many months late, because I don't really go on that site anymore. But it was a favorite of mine for many years. 

After Seeking Alpha (which now offers a very shitty service unless you pay), here's another website that wants your money against some general information. We're not talking about super useful information. We're talking mostly about opinions. 

There's probably a lot of alternatives offered to investors out there, so I believe that forcing people to pay to consult information/opinions on these websites will only make them less and less popular. That's what they deserve. Because nobody wants to pay for such general information. I would never pay to read the opinion of dozens of investors that I don't respect (on Stockchase, 90% of investors don't deserve any attention from us). 

Young investors will have to look elsewhere to copy opinions of so-called experts. The result will probably be the same because "experts" are bad everywhere. And whatever I'm saying, young investors just want to be convinced by somebody who looks sure about what he's saying. 

I repeat what I've once said: forget all that and buy stocks with high margins (over 20%) and high ROE (over 20%). Of course, don't pay too much for these two metrics (like a PE of 50 for instance) With both these metrics, you're better than at least 80% of investors. And you can afford to never visit Seeking Alpha and Stockchase again. 

Five Below (FIVE): incredible results

Five Below is a company that everybody should follow: it's the most promising cheap stuff  store in my opinion. And it's not new. It's been the most promising cheap stuff store over the last 5 years at least. 

Five Below's latest results: 

Net sales: up 52% compared to same quarter 2020

Net sales: up 55% compared to same quarter 2019

Comparable sales (2021): up 39% 

Comparable sales (2020): down 12% from the year before 

EPS last quarter: 1,15$

EPS comparable quarter 2020: 0,53$

EPS comparable quarter 2019: 0,51$

New stores open last quarter: 34

New stores planned to open in 2021: 170-175

Current number of stores: 1121

Even if the latest reults were great, the market wans't convinced because the stock dropped by about 14% yesterday. I don't understand that reaction. But there's many things I don't understand. 

Of course, 2020 has been a tough year for many businesses including Five Below. But if we compare the latest sales to sales two years before, an increase of 55% is amazing to me. And the EPS have more than doubled since 2019 and since 2020 too.

The debt level of FIVE is way higher than it was some years ago. However, excluding this item, Five Below has everything I'm looking for as an investor. Plus, we can currently pay about 34 times earnings for this exceptional company. Of course, it's not cheap, but many companies are growing much slower than that and are much more expensive. 

So, in a relative way, it's a great company to buy,. 

In my not-always-right opinion, of course. 

Portfolio review: august 31th, 2021

In 2010 and 2015, I filled an Excel document with financial objectives for the next 5 years. 

I learned that at University: you have to set some objectives in life, otherwise, you never really know where you're going and you can't validate if you're doing good or not. Also, objectives motivate you to take action.  

For instance, in 2015, I planned that, five years later (2020), my portfolio would reach an ambitious number. Today, less than one year after that objective of 2020, my portfolio worths almost twice my objective for 2020. I'm sure that this Excel file motivated me to put efforts in my portfolio. I didn't watch it often, but I had it in the back of my mind.  

My 20 years-old nephew is the exact opposite of that. He finished high school but became a drop-out afterwards. He had the spontaneous idea that getting some big tatoos on the leg and on his side would be a good idea. He even got his ears pierced and got a perm. Recently, he bought a 27 000$ car and planning to find a job to help him to pay for that car (instead of getting a job and having a car to help him to get to his job)... To me, it's impossible that he will do well later on a financial level. He's cruising in total fog. And he'll probably never read the Bernard Mooney book about investment that I gave him last year. 

If you want to get rich, you have to make some efforts, you also have to save money and don't start life with useless debts. Buying a 27 000$ car at 19 years old is one of the worst financial decision of your life. But I guess that some people have to make stupid decisions to learn. 

***************

Sell in may and go away. Fuck that expression. I knew it wasn't said by Socrat or Winston Churchill, but this year, the famous expression bites the dust like rarely before. 

Last time I wrote a portfolio review was on may 31st, and, at the time, my portfolio was up 6%. I was beaten by the S&P500.   

Three months later, my portfolio is up 27% since the beginning of 2021. I'd never thought it could be possible, but my portfolio has been up more than 20% in three months, without any major transaction. Exchange rate is a little more on my side than 3 months ago, but not that much (it helps because I'm more than 80% US). That's crazy. 

And what's even crazier is that my performance was worse than the S&P500 and is now 5% above the performance of the S&P500. Talk about a turn-around!

Here comes the usual numbers about my portfolio:

Number of stocks: 20

Average ROE: 31

Average FWD PE: 37

Average Beta: 1

As you can see, my portfolio is very expensive (FWD PE: 37). But I like every stock I own. Most of them grow rapidly and are very predictable. So, I don't see why I should sell them for a less performing stock. 

But, a FWD PE of 37 is not normal. Not normal at all. I have to think a bit more about that... No changes expected on the short run, but when the historical average is way behind, you have to think about it.