During the  month of September, the TSX Index fell 3.7%,  but was up some 1.1% YTD and 6.2% over last 52 weeks. Real GDP was essentially unchanged in 2^nd quarter 2023 with slowdown in housing investment leading the decline. The BOC stayed the course on September 7^th with the policy interest rate at 5% and inflation at 4% in August. Employment in Canada has been strong: up 39.9k in August and 64K in September. These numbers are essentially in line with pace implied by population growth. With this background, the following table reflects the top and bottom stock performers in the period.

The North West Company Inc

The best performer was North West company (NWC) whose stock was up 12.16% on the month, down 3.82% YTD and up 6.81% over the past year. The stock hit a near term low on September 7^th , 2023 of $29.81 from which it rose precipitously to $34.65 on September 13^th  about where it closed for the period.

It is a leading retailer to rural and developing small population communities in northern Canada, rural Alaska, the South Pacific and the Caribbean. It started in 1987 when the Company's predecessor purchased 178 stores comprising the Northern Stores Division of the Hudson’s Bay Company. Its stores offer a broad range of products and services with an emphasis on food and a compelling value offer of being the best local shopping choice for everyday household and lifestyle needs.

The announcement on September 12^t ,2023 of 2^nd quarter results was the apparent trigger to this stock price jump. Sales at $618 were up 6.8% over the prior year  comparable period; Gross profit was up 11.1%; adjusted EBITDA at $83.3 million was up 14.7%; net earnings at $38 million up 17.5%; diluted eps were $0.76 compared to $0.64 in the prior period.

Near term operations will continue to be influenced by inflationary cost pressures and wild fires. Over the longer term, Management believes the outlook is favourable due to impact of Government transfer payments and higher infrastructure spending in indigenous communities.

Parkland Corporation

The 2^nd best performer was Parkland Corporation (PKI) whose stock was up 11.08% in the month, 33.66% YTD and 35.76% over the past year. The stock price has risen throughout the past year from a low of $25.82 on November 14, 2022: Recently, from $35.75 on August 31, 2023 the price rose to $39.09 on September 7^th.

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.

On September 5^th, Management announced that strong performance has led to increasing Adjusted EBITDA guidance for 2023 to $1.8 to 1.85 billion (from $1.7 to 1.75 billion) due primarily to favourable crack spreads. . Additionally, 2024 adjusted EBITDA guidance is projected to be approximately $2 billion, one year earlier than previously stated. This reflects ongoing synergy capture, realization of $100 million cost efficiencies, organic growth and optimized supply advantage. Also, cash flow per share in 2024 is guided to now be approximately $9.50 per share (up from $8.30 in 2022) and return on invested capital  is projected at more than 11% (up from 8.3% in 2022). This announcement appears to be the proximate cause of the lift in stock price on September 7^th.

Magellan Aerospace Corporation

The 3^rd best performer was Magellan Aerospace (MAL) whose stock was up 5.13% on the month; down 24.2% YTD and up 9.06% over the past year. It was the worst performer in August. The stock peaked at $10 in late December 2022, fell to a low of $6.94 in mid April, rising up to $8.30 in mid July, it then dropped  to $7.04  in mid September from which it rose to close.

MAL is a diversified supplier of components to the aerospace industry. It designs, engineers and manufactures aeroengine and aerostructure components for aerospace markets, including advanced products for defense and space markets, and complementary specialty products. In  the second quarter of 2023, 43% of business was in Canada; 27.7% in USA; 29.3% in Europe.

MAL released its results for the second quarter ending June 30, 2023 on August 8^th,and they were strong: Revenues at $219.7 million were up 14% over prior year; Net income at $2 million ($0.03 per share) was up from 0.5 million and adjusted EBITDA at $19.6 million was up 39.7%. There is no apparent catalyst  to drive the stock price up in mid September – some people must have liked the stock.

Shopify Inc

The 3^rd worst  performer was Shopify (SHOP) whose stock was down 17.52% on the month; up 57.71% YTD and up 102.13 over the past year. It was the 2^nd best performer in April. It had been rising all year until it hit $90.73 on September 1, 2023 from whence it fell to the close.

Shop is a leading provider of essential internet infrastructure for commerce, offering tools to start, grow, market, and manage a retail business of any size. It is particularly attractive to small businesses and occupies a nascent software niche which is growing rapidly.

Results for the second quarter ending June 30, 2023 were published on August 3, 2023. Revenue at $1.7 billion was up 31%; loss from operations was $1.6 billion (after $1.3 billion for impairment on sales of shopify’s logistics business); net loss of $1.3 billion compared to a net loss of $1.2 billion in  the prior year; Free cash flow $97 million; cash of $1.6 billion and marketable securities of $3.2 billion. This company is not going under in the near future. Management expects revenues  in the third quarter to be up in low 20% range and FCF to be more than the entire first half.

Dye & Durham Limited

The second worst performer was Dye & Durham Limited (DND) whose stock was down 26.27% on the month; 18.95% YTD and 14.63% over the past year.  Over the year the stock price has jumped around:  from a low of $12.01 on December 12, 2022 to a near term high of $20.31 on September 13, 2023 from which it fell precipitously to a low of $12.94 on September 28^th. It was the 3^rd best performer in June.

DND is a leading provider of cloud-based legal software and payments technology solutions designed to improve efficiency and increase productivity for legal and business professionals. DND has approximately 1,400 employees and more than 60,000 customers around the world, with operations in Canada, the United Kingdom, Ireland and Australia, and more recently, South Africa.  Management anticipates that by growing its business organically and through M&A over the long term, it will be successful in building the company to a billion dollars of adjusted EBITDA.

The results published on September 13, 2023 for the 2^nd quarter and fiscal year ended June 30, 2023 were clearly not well received. For the quarter, revenues at $120.2 million were down 7%; net loss was $89.2 million (an impairment charge on assets held for sale of $66.7 million accounted for much of this); adjusted EBITDA at $65.7 million was down 13%. It is not hard to figure why the stock price dropped. DND continues to grow its Annual Recurring Revenue (“ARR”) contracted and has grown to $104 million as of August 31, 2023.

Illumin Holdings Inc

The worst performer was Illumin Holdings Inc (ILLM) whose stock was down 27.95% on the month; 12.44% YTD and 23.75% over the past year. Over that year the stock price peaked at $2.65 in late November 2022 and zig zagged its way to a near term high  of $2.51 at August 31, 2023 from whence it plunged to $1.65 on October 3^rd.

ILLM is a technology company that enables marketers to connect intelligently with audiences across video, mobile, social and online display advertising campaigns. Its Programmatic Marketing Platform, powered by proprietary machine learning technology, is at the core of its business, accompanied by patented solutions for analytics-led video and mobile targeting that leverages data.

On August 10^th, 2023 results for 2^nd quarter ended June 30^th were announced: Revenues at $33.2 million were up 17.3%; adjusted EBITDA was $0.02 million compared to $1.5 million in the prior year and a net loss of $5.6 million occurred (foreign exchange loss of $2.4 million contributed to this result). Cash on hand was $63.6 million. Following this ILLM launched a large share buy back program which resulted in securing nearly 4.6 million shares for nearly $12.2 million. It went on to announce its intention to voluntarily discontinue its NASDAQ listing. IllM certainly has enough cash to continue and management remains hopeful.

These are just some of the more than 60 Canadian companies we cover at 5i Research. To view their recent reports you can search for their tickers in the Reports section. If you are not a member and would like to gain access to these reports as well as the Q&A service where you can ask and search questions on these companies, you can fill in your information below to sign up for a free trial.

Take Care,

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