The TSX index was up less than 1% on the month, but up 10.3% YTD and up 1.63% over the past year. This compares to the Dow Jones Average which was up nearly 13% over 52 weeks; the S&P 500 up 21% over 52 weeks; while the Nasdaq Index was up 32% over the past year. Canada’s GDP increased 0.2% in November: goods producing industries surged 0.6%, while service producing industries were up 0.1%; Industrial production rose 0.8%; projections show GDP in December up 0.32%. Canadian wage growth is predicted at 6.1% for 2023. This is clearly too high. The inflation rate was 3.12 %Y/Y in November. Proscribed Interest rates held steady both in Canada and the USA. With this background, the following Table lists the top and bottom performers during the month of January, 2024.
Tricon Residential Inc (TCN)
The no 1 performer in January 2024 was Tricon Residential Inc (TCN) whose stock was up 23% in the month, 23%YTD, 28% for the past year. The stock hit an early low of $10.18 in March 2023, rising to a high of $12.22 in mid July only to fall to a low of $9.11 in October and rising from there to close at $14.80.
Tricon provides quality rental homes and apartments in great neighborhoods (including Toronto), along with exceptional resident services through its tech-enabled operating platform and dedicated on-theground operating teams
It has a single-family rental development platform in the U.S. with approximately 2,500 houses under development, as well as numerous land development projects that can support the future development of nearly 21,000 single-family homes. It also has a Canadian multifamily development platform that is building approximately 5,500 market-rate and affordable multifamily rental apartments.
On November 7th, management announced results for quarter ended September 30, 2023. Net income at $81.1 million was down $97.7 million ,offset by $99.9 million earned from performance fees in the prior period. Management stated, “The operating fundamentals of our single-family rental business remain consistently strong with near-full occupancy, low turnover, and healthy same home NOI growth of 6.0% delivered in the third quarter. Our U.S. residential development business and our newly-launched Canadian multi-family properties are also performing well above our expectations.”
With this background, Blackstone Real Estate announced on November 19th, a bid to take TCN private at $11.25US (approx. $15.17 Canadian). BREIT will continue its approximate 11% ownership post closing.
Illumin holding Inc (ILLM)
The no 2 performer in January was Illumin Holdings Inc (ILLM) whose stock was up 22% on the month; 22% YTD, and down 19% over the past year. This relatively recently listed stock had a very strong month in January.
ILLM Provides a programmatic platform where clients can plan, activate and measure one’s online advertising; it brings media planning and buying together in an interactive and intuitive interface. llumin is a journey advertising platform that enables marketers to reach consumers at every stage of their journey by leveraging advanced machine learning algorithms and real-time data analytics. The Company’s mission is to illuminate the path for brands to connect with their customers through the power of data-driven advertising.
There were no events which could account for the rise in the stock price. It seems its lineage is supporting it.
The third best performer was Aritzia Inc (ATZ) whose stock was up 19% on the month and YTD, but down 32% over the past year. The stock has languished over the past year from a high of $42.64 at the beginning in early February and falling to $22.00 on mid October 2023, rising to close at $32.71. It was the second worst performer in July 2023.
ATZ is a vertically integrated design house, home to an extensive portfolio of exclusive brands for every function and individual aesthetic operating from an innovative global platform offering Everyday Luxury on line and in its 114 boutiques in Canada and the USA.
Results for the third quarter ended November 26, 2023 had net revenue at $653.5 million, up 4.6%, while net income at $43.1 million was down 23.3%. Gross profit at $637.7 million was down some $34 million primarily due to normalized markdowns, inflation in product costs, temporary warehouse costs related to inventory management and other factors. SG&A expenses were up $80.7 million, or18.7% driven by investment in talent to support growth.
Management reiterated its support for the 2022 Strategic and Financial Plan and stated that net revenue in the 4th quarter would be between $670 million and $690 million, continuing trajectory of 6% to 7% increase, although the drag from increased Cost of sales and SG&A will persist.
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Lightspeed Commerce Inc (LSPD)
The third worst performer was Lightspeed Commerce Inc (LSPD) whose stock was down 11% in the month, 11%YTD but up 3% in the past year. The stock price bumped around over the year between $23 and $17and rose to $27.82 on December 25, 2023 from which it fell back to close at $24.81. I t was the No 2 performer in December 2023.
LSPD offers a cloud-based point of sale (POS) system for retailers and restaurateurs. Its solutions enable users to manage end-to-end processes including inventory, loyalty, sales, and analytics as well as offering various products, such as retail POS, Restaurant POS, e-commerce and Onsite.
Latest results to come on Feb 8th.. Meantime stock is riding in previous quarter results which were an improvement.
BRP INC (DOO)
The number 2 worst performer was BRP Inc (DOO) whose stock was down 11%, 11% YTD and down 24% over past year. It started out the year at $ 120 moved down and up to close at $84.84. It was the no 2 worst performer in November.
Results for the 3 months ended October 31, 2023 reported a decline in volume. Revenus at $2.5 billion were down $241.5 million or 8.9% primarily due to a decline in 3WV and SSV models sold combined with US Mexico border problems; additionally, PWC and Sea-Doo sales were down. Net income at $63.1 million was down $78.5 million, or 55% due primarily to lower operating income, and increased foreign exchange.
BRP noted, “Like the rest of the industry we have observed softening demand. We have proactively adjusted production to manage network inventories
Richelieu Hardware Ltd (RCH)
The 3rd worst performer was Richelieu Hardware Ltd (RCH) whose stock was off 10% in the month; and 10%YTD but up 10% over the past year. RCH had a low of $36.96 early in the year, but subsequently moved up to the mid $40’s dropping to close at $43.42.
RCH is a leading North American importer, manufacturer and distributor of specialty hardware and complementary products. Its products are targeted to an extensive customer base of kitchen and bathroom cabinet, storage and closet, home furnishing and office furniture manufacturers, residential and commercial woodworkers, door and window, and hardware retailers including renovation superstores. Richelieu offers its customers a broad mix of high-end products sourced from manufacturers worldwide. Its product selection consists of over 130,000 different items targeted to a base of more than 110,000 customers who are served by 112 centres in North America – 50 distribution centres in Canada, 59 in the United States and 3 manufacturing plants in Canada.
Results, posted Jan 18,2024 were somewhat disappointing: Revenues at $1,787.8 millions were down 0.8%; EBITDA at $230.4 million was down 19.8%; net earnings at $113.8 million were down 33%. 6 acquisitions were closed in the fiscal year and 2 more thereafter. RCH generated net cash flows of $1.1 billion for the 9 month period; it invested 352.5 million to add production capacity and modernize its software infrastructure; it also returned $409.0 million to its shareholders over the 9 month period.
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Disclosure: The analyst(s) responsible for this report do not have a financial or other interest in the securities mentioned.
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