The TSX index was up 3.5% for the month of December 2023, up 8.68% for the year 2023. This compares to the performance of the S&P 500 which was up 24.2% for the year; DJ Industrials up 13.7% and the Nasdaq Index up 43.4%. Globally, 2023 was a strong year as hopes for interest rates to turn down in 2024 led to general price earnings ratio expansion as the year ran out. However, inflation rose to 3.4%Y/Y for December 2022 in Canada and the US inflation rate also ticked up to 3.2%. On the employment front, full time employment was sinking in the US and Canada. The high immigration rate in Canada softened the employment drop in Canada. That fact will also soften a drop in home prices, but support rising rental rates. Rate cuts are still expected in 2024, but perhaps at a slower rate than previously anticipated. With this background the following Table presents the high and low stock market performers in Canada in December 2023.
The no 1 performer in December was the relatively newly listed Lumine Group Inc (LMN) whose stock was up 29% on the month. This is a company (formerly a subsidiary of Constellation Software) which merged with Wide Orbit in February 2023 following a merger plan and subsequent reorganization (carve out). This was completed On February 22 and 23, 2023 at which time LMN became free standing with, Constellation as its controlling shareholder, with a public float owned by former Constellation shareholders and a public listing. Lumine Group acquires, strengthens, and grows vertical market software companies in the communications and media industry.
On December 20, 2023 LMN announced agreement to acquire Device Management and Service Platform from Nokia. Its earlier good reported numbers in November carried it along.
Lightspeed Commerce Inc (LSPD)
The number 2 performer in December was Lightspeed Commerce Inc (LSPD) whose stock price was up 28% on the month; 44%YTD and 43% over the past year. This is a stock which has bounced around over the year only to close at $27.81 in late December 2023, a 52-week high.
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.
Results for the quarter ended September 30, 2023 were better; Revenues at $230.3 Million were up25%Y/Y; Net loss down to$42.5 million compared to a loss of $79.9 million; $761.5 million cash on hand. Outlook for the full year was announced calling for Revenues of about $900 million and adjusted EBITDA at break even or better.
The number 3 performer in December 202 was Park Lawn Corporation (PLC) whose stock was up 24% on the month; but negative 24% for past year. The stock price has fallen from a high of $28.62 in late February 2023 to a low of $16.26 at the end of November 2024 to close at $19.76.
Results for the quarter ended September were favorably received: Revenues at $87.5 million were up 8.2% and operating expenses at $66.5 were up 7.9%. However, Other expenses at $16.5 million were up 35% primarily due to increases in labour fees and the impact of greater borrowings. As a result, Net income at $3.3 million was down 38%. EBITDA at $16.2 million, however, was up 3.9%.
The announcement on December 20,2023 of the completion of the sale of Park Lane Cemetery Co (USA) and other assets for $70 million likely supported the stock price. This sale included 70 Cemeteries and 11 Funeral Homes in Kentucky, Michigan and the Carolinas.
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The third worst stock performer in December was Parkland Corporation (PKI) whose stock was down 4% in the month, but up 44% for the past year. This is an unusual position for a strong performer over the year. From a low of $28.12 in mid March 2023 it rose pretty steadily to a high of $44.77, to close at $42.63.
Parkland is an international fuel distributor and retailer with operations in twenty-five countries. With approximately 4,000 retail and commercial locations across Canada, the United States, and the Caribbean region, it has developed supply, distribution, and trading capabilities to accelerate growth and business performance. In addition to meeting customers' needs for essential fuels, PKI provides a range of choices to help them lower their environmental impact. These include carbon and renewables trading, solar power, renewables manufacturing and ultra-fast EV charging.
Results for the quarter ended September 30, 2024 showed Revenue at $8.9 billion , down 5.8% (9 month revenue down 7.1%); net earnings of $230 million up 48.7% (Gain/Loss on risk management assets accounted for some of this). On November 14th, 2024, PKI hosted its investor day and announced its intention to enhance shareholder returns in a refreshed five year plan; grow adjusted EBITDA; double cash flow and reduce leverage. On November 16th, PKI announced they had secured $210 million to fund future investment in EV charging. (2000 public fast charging ports to come on line across Canada). PKI’s sector target for Green Infrastructure is now $10 billion. Finally , PKI is projecting cumulative available cash from 2004 and 2008 of $6 Billion of which $1.5 billion is earmarked to dividends and share buybacks and $1.5 billion to organic growth initiatives; the remaining $3 billion will be used to reduce the leverage ratio with the remainder to be strategically allocated.
K-BRO Linen Inc (KBL)
The second worst performer was K-Bro Linen (KBL) whose stock was down 6% on the month, although up 21% YTD and17% for the past year. The stock had a low of $27.51in mid march 2023 followed by a high of $35.60 at the end of August to close at $32.90.
K-Bro Linen Inc. is a Canada-based owner and operator of laundry and linen processing facilities. The Company provides laundry and textile rental services in Scotland and the Northeast of England. The Company and its wholly owned subsidiaries operate across Canada and the United Kingdom, providing a range of linen services to healthcare institutions, hotels and other commercial accounts that include the processing, management and distribution of general linen and operating room linen.
Quarter 3 results had Revenues at $86.9 million, up 18%; EBITDA at $17.7 million, up 60.5%; earnings at $6.7 million compared to $2.5 million; Long term debt stood at $45.2 million, up 10 million, due to Paranet acquisition.
Management’s outlook called for the healthcare segment to experience steady growth, while the hospitality segment is expecting a solid recovery with the elimination of certain government restrictions. Labour availability is a little more challenging; KBL will likely refocus on strategic acquisitions.
The worst performer was Gildan Activeware Inc (GIL) whose stock was down 11% on the month while up19% for the past year. From a high in late February 2023 of $45.71, it dropped to a low of $36.73 from which it rose to $50.12 only to fall to the close of $43.81.
The big news for GIL was the firing (by the Board ) of the founder and chairman, Glen Chemandy, on December 10, 2023. Chemandy and a number of outside shareholders have been fighting back, calling for his reinstatement and pressing for meetings. The board is sticking to its decision and until this is settled, the outlook for this company remains unpredictable. A new CEO has been hired and is at work.
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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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