The TSE Index was down 1.77% in the month of June, up 4.38% YTD and 8.54% over the past year. Canadian GDP was up 0.4% in the third quarter of 2024 and 0.50% for the full year; in the USA the GDP was up 1.4% for the third quarter and 2.90% for the full year. Canadian inflation rate was 2.90% annually in June 2024 and the US annual rate was 3.30% in June 2024. With this background, the following Table presents the highest and lowest performers for the month of June 2024.

Park Lawn Corporation (PLC)

The top performer of June was Park Lawn Corporation (PLC) whose stock price rose 56% on the month, 32% year-to-date, and 15% from the year prior. The stock had been on a steady downturn since the end of 2021 with plenty of volatility as well. PLC was trading near 52-week lows of $15.48 in May prior to the big jump in share price now up to the highest points over the past year touching $26.15.

Park Lawn Corp (PLC) is Canada’s only publicly listed cemetery, funeral and cremation operating company. It is one of the largest providers of deathcare products and services in North America, and it operates in three Canadian provinces and 19 US states. The company’s primary operations include cemetery lots, crypts, niches, monuments, caskets, urns and other merchandise, funeral services, after life celebration services, and cremation services. Part of the prior weakness for PLC was due to demand being pulled forward over the pandemic and then this acting as a headwind in more recent years.

The huge jump in PLC’s stock price was on news that the company had agreed to be taken private. The company announced on June 4^th that it had agreed to terms with Viridian Acquisition Inc. for which shareholders will receive $26.50 per share. This was approximately a 60% premium from the prior days share price, hence the big pop this month giving PLC the highest return.

WELL Health Technologies Corp. (WELL)

The second-best performer of July was WELL Health Technologies Corp. (WELL) whose stock price was up 26% on the month, up 22% year-to-date, and flat over the past year.

WELL is one of the most prominent healthcare names in the Canadian market that focuses on tech-enabling healthcare practitioners, allowing them to improve patient experience and operational efficiency of clinics. WELL’s comprehensive healthcare and digital platform helps practitioners manage both front and back-office through its Software as a service (SaaS) offerings. In addition, WELL’s Patient Services is one of Canada’s largest owners and operators of patient clinics, offering a variety of services including primary care, specialized care, diagnostic, etc.

There was not much company specific news contributing to the big jump for WELL. Earlier on in the month, WELL announced that it had received approval from the TSX for an automatic share repurchase plan to cancel 6.2 million common shares (2.5% of outstanding shares as of May 31^st). This did not have much of an impact on the stock but the stock jumped days after this was announced. Later on in the month, WELL received a price target increases from Raymond James. The Bank increased WELL’s price target from $9 to $10 which was likely also a contributing factor to this month’s strong performance.

Propel Holdings Inc. (PRL)

The third-best performer of June was Propel Holdings Inc. (PRL) whose stock price was up 16% on the month, up 89% year-to-date, and up 238% over the past year. The boom over the past year has been evident as PRL’s 52-week trading range is $7.02-$29.89.

PRL is an innovative fintech company operating through its main three brands, MoneyKey and CreditFresh in the US, and Fora in Canada. Propel provides access to credit for both US and Canadian consumers which are considered underserved by the conventional financial systems. PRL has its own proprietary AI platform that evaluates consumer credit differently than traditional methods of credit scores, and the company has recently launched its Lending-as-a-Service (LaaS) product line in partnership with Pathward.

There has been no company specific news for PRL lately and price action over the last two months has been very interesting. The stock touched all-time highs at the start of May at $29.89, but this reversed over the month, and opened June at around $20. PRL ticked back up in June and put together a solid month given how low it opened the month. The decline in May could have been related to the Bank of Canada’s decision to cut rates. A lower rate environment and cutting cycle could allow the Big Banks to increase their risk appetites which would steal business away from PRL. This is just an opinion and we cannot be entirely certain as to what caused the down-then-up action from May to June given the lack of material information. PRL still looks attractive to us at an 11x forward earnings valuation.

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Pollard Banknote Limited (PBL)

The worst performer of the month was Pollard Banknote Limited (PBL) whose stock price was down 16% on the month, down 13% year-to-date, and up 9% over the past year.

Pollard Banknote Limited (PBL) is one of the leading providers of products and services to the lottery and charitable gaming industries in the world. PBL has seen its business grow to become what management believes to be the largest provider of instant tickets based in Canada, the second largest producer of instant tickets in the world, and the largest supplier of iLottery systems in the United States through a 50% owned joint venture.

While we do not see any company specific news for the selloff in June, the company did post disappointing earnings in the month prior, missing on EPS and revenue estimates. Revenue growth is not expected to be overly significant for the next two years, however, the company’s share in iLottery systems is expected to help meaningfully expand its bottom line. Part of the decline in June could be attributed to a broader small cap sell-off, but we do not see anything specific causing the large decline.

Brookfield Renewable Partners L.P (BEP.UN)

The second worst performer of June was Brookfield Renewable Partners L.P (BEP.UN) whose stock price was down 11% on the month, down 3% year-to-date, and down 12% over the past year. BEP.UN was previously the best performing stock in the previous edition of market movers up 32% in May, but it has since erased some of those gains.

BEP.UN is one of the largest pure play renewables companies in the world. BEP.UN has a 23-year history as a publicly traded operator and investor in renewable power and sustainable solution assets, currently employing approximately 4,770 workers. BEP.UN’s portfolio of assets spans hydroelectric, wind, utility-scale solar, and other sustainable solutions assets, including distributed generation solar and storage. BEP.UN’s portfolio of sustainable solutions assets includes investments in Westinghouse (a leading global nuclear services business), investments in an operating portfolio of carbon capture storage (CCS), renewable natural gas, and over one million tons of recycled materials annually.

There was no company specific news relating to the selloff. Scotiabank actually increased its price target for the stock by one dollar to $32 in June. The drop was likely more related to broader industry factors in the utilities/renewables space. Investors may have also slightly overreacted to the news of the Microsoft contract in May given that it begins next year and is a long-term project.

Magna International Inc. (MG)

The third worst performer of June was Magna International Inc. (MG) whose stock price was down 7% on the month, down 27% year-to-date, and down 22% over the past year.

MG designs, engineers, and manufactures components, assemblies, systems, subsystems, and modules for OEM of vehicles and light trucks worldwide. Price action has been quite negative over the last year touching 52-week highs last summer at $87, but the stock has been on a steady down trend and recently hit 52-week lows of $55.93.

Part of the decline could be driven by weak earnings published in May, missing sales forecasts and cutting full-year sales guidance. Numerous banks cut their price target on Magna following the earnings, with Wells Fargo being the most recent to do so in late June. The decline was likely driven by the weak earnings and general concerns related to the auto industry.

Take Care,