The TSE Index was up 0.65% in the month of October, up 15.26% YTD and 27.99% over the past year. Canadian GDP was up 0.50% in the third quarter of 2024 and 0.90% for the full year; in the USA the GDP was up 2.80% in the third quarter and 2.70% for the full year. The Canadian inflation rate was up 1.60% annually and the US inflation rate was up 2.40% annually in October 2024. With this background, the following Table presents the highest and lowest performers for the month of October 2024.

Propel Holdings Inc. (PRL)

The top performer of October was Propel Holdings Inc. (PRL) whose stock price was up 27% on the month, 179% year-to-date, and 344% from the year prior. PRL continues its significant run-up from trading at around $8 one year-ago and was a top performer in the July edition of this blog.

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 was not much company specific information contributing to PRL’s jump in October. PRL closed its previously announced bought deal offering at a price of $27.50 per subscription receipt, for gross aggregate proceeds of more than $115 million. The proceeds from the offering will be used to fund the acquisition of Stagemount Limited (announced late September), a digital UK-based fintech lender. The stock initially took a hit in September when the deal was announced due to the dilution to equity holders. However, the deal is expected to be accretive immediately and PRL bounced back nicely in October.

Vitalhub Corp. (VHI)

The second-best performer of October was Vitalhub Corp. (VHI) whose stock price was up 15% on the month, 149% year-to-date, and 264% over the past year. VHI, similar to PRL, has been one of the top Canadian growth stocks over the last year with impressive momentum. The stock was trading at just shy of $3 a year ago.

VHI operates as a technology service provider to the Health and Human Services sector. The company’s offerings mainly serve the digital health solutions market focusing on acute hospital, mental health, community and social services sectors. VHI’s solutions help customers with variety of functions such as patient flow, operational visibility, patient engagement and optimization solutions, as well as patient case management. VHI’s growth has been driven by its acquisitions strategy of acquiring small, private businesses with similar economics.

At the end of October, VHI announced that it agreed to acquire Strata Health Solutions for an initial payment of C$32.3 million, with additional performance-based payments possible. Strata Health is a Canadian company that develops software that enhances access to care. It partners with over 80 health systems and works with more than 500 hospitals. VHI said that the deal adds about $13 million in revenue, and it looks good to us. The stock hit new all-time highs following the announcement and is the primary reason VHI was a top performer this month.

Capital Power Corporation (CPX)

The third-best performer of October was Capital Power Corporation (CPX) whose stock price was up 15% on the month, 49% year-to-date, and 59% over the past year. CPX has broken out over the last few months and has a 52-week range $33.90-$56.82. It is not the typical company we would expect to be a top performer, but it exemplifies the recent momentum we have seen in utilities.

CPX is a North American independent power generation company which develops, owns, and operates power generation facilities using a variety of energy sources. It generates electricity from various energy sources, including wind, solar, waste heat, natural gas, and coal.

The stock jumped at the end of October following a third quarter report that came in well ahead of analysts’ estimates, but numerous metrics did decline year-over-year. EBITDA was $401 million, vs $376 million expected. Revenue was $1.15 billion, increasing nearly 13% from the prior year and was much higher than estimates. Adjusted EPS of $1.32 beat estimates by 39% expecting $0.95. Operationally, things are very good, and CPX achieved a quarterly power production record. Numerous brokerages also upped their price targets on CPX following these strong results. With a 4.8% dividend and at 13X earnings, investors decided the stock was too cheap after the big beat on adjusted earnings.

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Real Matters Inc. (REAL)

The worst performer of the month was Real Matters Inc. (REAL) whose stock price was down 23% on the month, up 12% year-to-date, and up 44% over the past year. REAL had previously been a top performer in numerous editions of this blog and now has a 52-week range of $4.95-$9.46.

REAL operates in the real estate appraisal and title service industry in North America, the company plays an essential role in the value chain of the real estate market by helping mortgage lenders reduce the risk of lending and meet regulatory requirements. In addition, REAL also provides insurance inspection services by ensuring all the historical and current owners of the property are taken into account during the due diligence process, maintaining transparency between buyers and sellers. REAL generates revenue by providing local knowledge and expert opinions on the fair market value of a residential property.

We do not see any company specific news contributing to REAL’s decline. In the US, housing start data reported in October came in weak, presenting a decline from prior month levels. Additionally, in both Canada and the US, bond yields have been rising suggesting that interest rate cuts will be fewer than expected. While not definitive, we think that a change in future interest rate expectations and weaker housing data fuelled the decline for REAL in October.

StorageVault Canada Inc. (SVI)

The second worst performer of October was StorageVault Canada Inc. (SVI) whose stock price was down 21% on the month, 22% year-to-date, and 5% over the past year. SVI has been quite choppy this year but has ultimately trended downward.

SVI owns, manages, and rents self-storage and portable storage space to individual and commercial customers in Canada. It operates through three segments: Self Storage, Portable Storage, and Management Division.

SVI’s shares sunk following weak Q3 results. Revenue of $78.48 million matched estimates and increased 4.3% year-over-year. Same-store revenue growth was 1.6%, impacted by lower housing sales/renovations. Cash flow per share was flat at 6.2 cents. The company also noted 'slower population growth' but this is somewhat confusing considering Canada's growth in that area. Net operating income was $54 million, up 2.7%. The dividend was increased (previously announced). It finished the quarter with 249 locations. The stock is down 16% YTD, as growth has very much slowed vs prior years. It also saw a couple of broker downgrades the week prior to earnings. It was not a disaster quarter, but certainly it is moving into a slower growth period. Debt remains high and another net loss (7c per share) is expected in 2025, based on consensus. Shares have bounced a bit to start November, as SVI announced a $10.5 million acquisition paid for with funds on hand.

BRP Inc. (DOO)

The third-worst performer of the month was BRP Inc. (DOO) whose stock price was down 15% on the month, 28% year-to-date, and 27% over the past year. DOO recently reported weak earnings which made it the biggest decliner in last month’s edition of this blog.

DOO was spun out in 2013 from Bombardier Inc. The company operates as a designer and manufacturer of power sports like snowmobiles, recreational motorcycle vehicles and marine products composed of boats, marine engines, etc. The company’s main operations are in North America, and it possesses a diversified portfolio of brands including Can-Am ATVs, SSVs, 3WVs, Ski-Doo and Lynx snowmobiles. DOO sells its products through a network of dealers and distributors.

In mid-October, DOO announced that it will sell its marine business (this excludes all activities related to the Sea-Doo brand). The company mentioned that this move was made in light of the challenging economic context, and it allows them to focus more on its more core brands. Not entirely a bad move and analysts have labelled it as ‘the right move.’ Additionally, peer company Polaris (P) issued weak guidance in its quarterly results which brought the whole sector down even further.

Take Care,