The TSE Index was up 6.16% in the month of November, up 23.93% YTD and 26.73% over the past year. Canadian GDP was up 0.30% in the fourth quarter of 2024 and 2.00% for the full year; in the USA the GDP was up 2.80% in the fourth quarter and 2.70% for the full year. The Canadian inflation rate was up 2% annually and the US inflation rate was up 2.60% annually in November 2024. With this background, the following Table presents the highest and lowest performers for the month of November 2024.

Shopify Inc. (SHOP)

The top performer of November was Shopify Inc. (SHOP) whose stock price was up 49% on the month, 57% year-to-date, and 62% from the year prior. SHOP has had a strong recovery from its 52-week low point where shares were trading at $72.36, now touching 52-week highs of $162.99 in November.

Shopify (SHOP) is a leading global commerce company that provides essential internet infrastructure for commerce, offering tools to start, scale, market, and run a business. SHOP has transformed since inception in 2004, initially as a platform to help small businesses set up online stores. SHOP now provides all types of merchants with an all-in-one solution spanning a multi-channel front end, a single integrated back end, and infrastructure for data-informed decisions.

SHOP’s stock soared after a very strong third quarter earnings report and guidance. Revenue growth accelerated 26%, to $2.16 billion, beating estimates of $2.12 billion. Merchant solutions revenue was $1.55 billion, up 26% and ahead of estimates ($1.52 billion). Subscription revenue also rose 26%. Gross merchandise volume (GMV) rose 24% and was ahead of estimates. Q4 revenue guidance calls for 'mid to high twenties' percentage growth. It was a strong quarter for SHOP beating on essentially all of analyst estimates and the stock is now up over 40% year-to-date.

Galaxy Digital Holdings Ltd. (GLXY)

The second-best performer of November was Galaxy Digital Holdings Ltd. (GLXY) whose stock price was up 42% on the month, 148% year-to-date, and 202% over the past year. GLXY’s continues its impressive momentum as its 52-week low of $7.61 was seen in January.

Galaxy Digital Holdings Ltd. (GLXY) is a holding company whose only significant asset is a minority interest in Galaxy Digital Holdings (GDH) LP. The stock, GLXY, holds a 33.7% interest in GDH LP as of March 31, 2024, and the carrying value of this investment is $898.3 million. GDH LP is a financial services and investment management company that provides institutions with a full suite of scaled financial solutions across the digital assets space. Its main focus is on digital assets and blockchain technology and creating a comprehensive set of solutions for its customers across digital asset trading, lending, investment banking services, asset management, and infrastructure.

GLXY’s performance is heavily leveraged to the digital asset space where there has of course been very strong momentum recently. The company’s recent earnings reported in November were fairly strong featuring news that it executed a non-binding term sheet with a US-based hyperscaler to host high-performance computing at its Helios campus. This helped boost its share price further. With the potential for a more crypto-friendly SEC and US regulatory landscape, the crypto space has been re-rating higher.

The company did also close a $402.5 million convertible senior note offering. This took some wind out of GLXY’s sails as the market did not like the added debt and risks of future dilution. However, the debt is primarily being used for the Helios campus project, so it is not entirely negative, and it did not stop GLXY from having an excellent November.

CAE Inc. (CAE)

The third-best performer of November was CAE Inc. (CAE) whose stock price was up 34% on the month, 15% year-to-date, and 24% over the past year. After plenty of choppy trading action throughout the year, CAE broke out in November. The stock’s 52-week range is $22.28-$33.77.

CAE provides software-based simulation training and critical operations support solutions equipping workers in in high-stakes roles such as pilots, cabin crew, airlines, defense and security forces and healthcare practitioners to perform at their best every day. CAE operates through two primary market segments: civil aviation and defense and security.

CAE reported earnings in November, seeing EPS of 24c beat estimates of 19c. Revenue of $1.13 billion beat estimates of $1.08 billion. The backlog is now a record $18 billion. We have liked the stock historically, but it has had lots of execution issues, in particular with integrating its defense segment. The company also announced that its CEO will also be leaving in August. CAE has high market share, but we always thought it should be more profitable overall, considering its moat and duopolistic industry with really just one other serious global competitor. This quarter was a step in the right direction, but CAE has an expensive multiple at 25.5x forward earnings, which we think puts the shares around their fair price.

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Stella-Jones Inc. (SJ)

The worst performer of the month was Stella-Jones Inc. (SJ) whose stock price was down 15% on the month, 7% year-to-date, and 9% over the past year. SJ dipped to 52-week lows of $67.13 in November.

Stella-Jones (SJ) is North America’s leading producer of pressure-treated wood products. The company supplies the continent’s major electrical utilities and telecommunication companies with wood utility poles along with, short line and commercial railroad operators with railway ties and timbers. SJ also provides industrial products, which include wood for railway bridges and crossings, marine and foundation pilings, construction timbers and coal tar-based products. SJ is headquartered in Quebec with a workforce of over 2,900 employees and 45 wood treating facilities across North America.

SJ reported third quarter earnings in November which were weak. EPS was $1.42, missing estimates of $1.75; revenue of $915 million missed estimates of $1.01 billion. EBITDA of $162 million missed estimates by 12%. Lower sales of utility poles were the main reason for the miss. Updated 2025 revenue guidance was also below consensus estimates. Margins were weaker as well. Total sales fell 3.6%. Lumber sales fell 19%. Net income fell 27%. It was a big miss from a usually reliable company. We would not overreact here, as the utility pole issue could be temporary, but it is certainly not a good quarter. SJ has had a weak year and while we think it is a high-quality company, there may not be a significant near-term catalyst.

Premium Brand Holdings Corporation (PBH)

The second worst performer of November was Premium Brands Holding Corporation (PBH) whose stock price was down 10% on the month, 16% year-to-date, and 12% over the past year. PBH hit 52-week lows of $75.67 in November, in line with where the stock was trading in the same month of 2022.

Premium Brands Holdings (PBH) is a company that aims to target and acquire food businesses across its two main platforms: Specialty Food Businesses and Premium Food Distribution. The company’s Specialty Food platform invests in and acquires businesses that cater to customers that are seeking high quality products, such as premium-processed meats, premium and natural processed meats, specialty deli products and fresh seafood processing. Its Premium Food Distribution platform offers customers specialized products in addition to logistical services.

PBH reported weak third quarter results in November.  EPS of $1.11 declined 12.6% year-over-year and missed estimates of $1.37. Revenue of $1.67 billion also missed estimates of $1.74 billion. The company highlighted that the weakness was driven by a problem within the firms Sandwich group. We think it is still a decent income name, but it has now missed estimates in 6 of 8 quarters so there is some frustration building here.

Sylogist Ltd. (SYZ)

The third-worst performer of the month was Sylogist Ltd. (SYZ) whose stock price was down 8% on the month, up 35% year-to-date, and up 40% over the past year. Despite being in the loser column this month, SYZ has had solid momentum in 2024 with a 52-week range of $6.51-$11.60.

Sylogist Ltd. (SYZ) is a software company that provides software-as-a-service (SaaS) solutions in North America and the United Kingdom. SYZ’s SaaS offering includes solutions that provide comprehensive ERP, CRM, fundraising, education administration, and payment solutions. SYZ’s mission-critical solutions across built around three core verticals: SylogistGov, SylogistMission, and SylogistEd.

SYZ reported earnings in November for which EPS of -3c missed estimates of 3.3c. Revenue of $16.56 million missed estimates of $17.2 million. EBITDA of $4.2 million matched estimates. Revenue rose 2.1% but recurring revenue continues to grow at a faster rate (9%). Bookings rose 14%. Gross margin was 60%. Commentary for the future was quite positive. The stock pulled back largely due to the top and bottom-line misses. However, good growth is predicted for 2025 and the keys here are margins and growth in recurring revenue. It is still early days as the company continues its strategic shift, but its partnerships are resulting in growing recurring revenue, and metrics have been improving or at least maintained.

Take Care,