Enghouse Systems Ltd. (ENGH) is a software communications company that provides services centered around contact centers, video communications, virtual healthcare, telecommunications networks, public safety and the transit market. ENGH has faced some difficulties with returning to its premium valuation and high margin profile days over the past several years, and while it remains profitable and continues to issue dividends, a muted growth outlook is putting pressure on the stock price. EnergDue to its higher number of headwinds relative to tailwinds, we are downgrading the name by one notch to a ‘B-‘.

GIL has been a consistent, longstanding Canadian clothing provider. The company’s vertically integrated supply chain has been a key value creator which has allowed GIL to carve out an international position in the ever-competitive clothing industry. We think GIL looks attractive despite the valuation expanding to higher historical levels. We are maintaining our B rating out of prudence to the leadership changes but will consider a re-rating if performance continues to be strong.

MTY is one of North America’s leading franchisors in the restaurant industry. Given the unfavourable macroeconomic conditions (high rates, inflation, consumer pressures) the growth of the stock has slowed. It does trade at very low multiples however which may understate a potential recovery and/or and acquisition. We are maintaining our rating of ‘B’