June was a rough month for stock markets around the world as many moved into bear market territory (down 20%) with the TSE index only off some 9%. The BOC raised its interest rate by 50 basis points on June 1st and the Fed followed by raising their’s 75 basis points. China shut down important sections of its economy exacerbating supply side shortages; inflation remained strong; the war in Ukraine raged on. Canada is faring better with strong commodity prices and higher consumer spending on the back of high employment, excess savings and growing real wages. The BOC will likely act aggressively and may be able to bring inflation down without a recession. Real estate prices will weaken, but the strong demographics in Canada will dampen the impact. With this background, the table below shows the top and bottom performers in the month of June.

NFI Group Inc (NFI) 
The top performer this month was NFI Group Inc (NFI) whose stock was up 11.57%. It was down 34% YTD and one of the worst performers in April. NFI is primarily a bus manufacturer with an offering that includes zero-emission vehicles (ZMB), charging infrastructure installations, telematics, and full parts and service aftermarket support. Its first-quarter results were posted on May 3rd and were not well received coinciding with the share price low for the YTD. New vehicle deliveries were off 27%, total revenue was off 20% and both net earnings and adjusted EBITDA were negative and significantly worse than the prior year. NFI announced it was in negotiation with its bankers to adjust its covenants. Supply chain problems chiefly accounted for these results as demand remained strong and the backlog grew. The share price bumped along through June as investors expected the “Forward 2.0” initiative to produce savings and the supply chain problems to gradually clear. An order for 95 Xcelsior buses was announced on June 13th and the quarterly dividend was declared. Management appears to be handling matters over which it has control and as the external issues recede results should get back on track.

Topicus.com Inc (TOI)

The second best performer this month was Topicus.com Inc (TOI) whose shares at $72.63 were up 8.94%, while down 37.4% YTD. TOI is a leading pan-European provider of vertical market software and vertical market platforms to clients in public and private sector markets. It acquires, manages and builds vertical market software (“VMS”) businesses. Its revenue consists primarily of software license fees, maintenance and other recurring fees, professional service fees and hardware sales. It is owned 74.71% by Constellation Software, a large and well-established public software company. The stock price dropped significantly over the last three months from a high on April 8th of $104.09 to a low of $66.63 0n May 31st presumably in sympathy with the overall technology market. Its quarterly results announced on May 3rd were satisfactory: Revenues at 203.8 million euros were up 13% and cash flow up 16% with over 200 million euros cash on hand. Accordingly, the stock price moved raggedly over the month in a relatively narrow range rising through the end of the month.

Winpak Ltd (WPK)

The third best performer was Winpak Ltd (WPK), a manufacturer and seller of high-quality packaging materials and producer of related innovative packaging machines, whose products are used primarily for the protection of perishable foods, beverages, and in health-care applications. Its stock was up 7.5% on the month and 18.35% YTD. It was ranked best in April and its good performance continues. It surged to a high of $44.50 on May 4th to close at $43.35 at the end of June. Its first-quarter results, published on April 26th, buoyed the stock price. Results were excellent: Revenues at US$276 million were up 22.8% (largely due to favourable selling price and mix changes); Net income at US$33.9 million ($0.52 per share) was up 38.3%. WPK continues to effectively manage an extremely volatile supply chain environment, inflationary pressures, a challenging and highly competitive labour market and the COVID-19 pandemic and anticipates solid volume growth for the final three quarters of the year. Investments at the end of 2021 have supported the acquisition of sizeable new cheese and protein business and continued expansion of the frozen food category. On June 20th a quarterly dividend of $0.03 per share was declared.

Enghouse Systems Limited (ENGH)

The third-worst performer was Enghouse Systems Limited (ENGH) whose shares were down 15.59% for the month and 41.3% YTD. It provides vertical enterprise software solutions focused on contact centers, video communications, healthcare, telecommunications networks, public safety and the transit market. It serves these markets through its two business segments, each developing and selling enterprise-oriented applications software. With the publication of less than spectacular 2nd quarter results on June 7th the stock sank 26.7% to $24.81, from which it recovered to $28.43 at month end. Second quarter revenue (for period ended April 30, 2022) was off 9.45% from the corresponding prior period due to attrition of certain agreements, reduced sales and unfavourable foreign exchange. Adjusted EBITDA at $33.8 million was down 15.9%. $31.1 million cash was generated from operating activities which led to an increase in cash of $16.5 million, resulting in $227.4 million on hand. Ongoing management focus will be on aligning prices to meet competition and cost control to meet inflationary pressures.

Well Health Technologies Corp (WELL)

The second worst performing company was Well Health Technologies Corp (WELL) whose stock was down 16.58% for the month and 37.47% for the YTD. The pullback in the technology sector likely was the major contributor to this result. It is a practitioner-focused digital healthcare company in Canada where it provides the largest network of outpatient medical clinics. In the United States, it provides omni-channel healthcare services and solutions targeting specialized markets. It provides practitioners the choice to either join WELL’s network (2100 practitioners) or purchase technology solutions from WELL (over 21,000 practitioners) while practicing at non-Well owned clinics. For the first quarter of 2022, revenues were $126.5 million; net loss was $2.3 million, both significantly better than the corresponding earlier period. The annual report showed revenue of $302.3 million and a net loss of $30.9 million. WELL believes its organic growth coupled with its continued focus on tuck-in acquisitions has the potential to enable the Company to exceed half a billion in annual revenue in 2022. This view was reinforced by the publication on June 29th of a somewhat self serving business update press release which suggested revenues would exceed $525 million and adjusted EBITDA would reach $100 million in 2022.

BRP Inc (BRP)

The worst performer was BRP Inc (BRP) whose share was down 19.5% on the month and 28.5% YTD. BRP is a global leader in the design, development, manufacturing, distribution and marketing of powersports and marine products. It employs close to 20,000 people and sells its products in over 120 countries. either directly through a network of approximately 2,800 dealers in 21 countries, as well as through approximately 170 distributors serving approximately 460 additional dealers. For the three months ended April 30th, revenues at $1.8 billion were essentially the same as prior comparable period, but net earnings at $121 million were only half that of the prior period. Inefficiencies due to supply chain disruptions, higher warranty costs and R&D expenses as well as unfavourable foreign exchange all contributed to this outcome. These results were announced June 3rd and the stock price promptly fell 15.6% to $85.90 and limped along to close ae at $79.22 at month end. Supply chain related disruptions are expected to last throughout Fiscal 2023. In its mid June quarterly review DOO pointed to strong consumer demand and guided normalized 2022 EPS growth of more than 50% over the prior year. This is a powerful global company and results should get back on track as supply chain problems abate.

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Disclosure: The analyst(s) responsible for this report do not have a financial or other interest in the securities mentioned.