The TSE Index was up 2.8% in the month of September, up 14.51% YTD and 22.82% 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 3.00% in the third quarter and 3.00% for the full year. The Canadian inflation rate was up 2.00% annually and the US inflation rate was 2.50% annually in September 2024. With this background, the following Table presents the highest and lowest performers for the month of September 2024.

Lightspeed Commerce Inc. (LSPD)

The top performer of September was Lightspeed Commerce (LSPD) whose stock price was up 28% on the month, down 20% year-to-date, and up 17% from the year prior. Things have been improving over the last year but LSPD remains volatile with a 52-week range of $16.04-$28.73.

LSPD provides cloud-based software subscriptions and payment solutions, empowering small and midsize businesses, retailers, restaurants, and golf course operators. The company operates globally, serving diverse industries, and it continually enhances its offerings to remain competitive in the e-commerce space. Roughly 62% are transaction-based, 34% of its sales are subscription-based, and the remaining 4% are hardware and other.

LSPD jumped at the end of the month when news broke that it was working with a financial adviser to explore a potential sale and other options. LSPD has confirmed the report and issued a press release that it had entered a strategic business review to discuss being taken over. Many analysts raised their target prices as a result on anticipation that LSPD could receive a significant premium. Going private seems like a potential option. While the premium is unlikely to be anywhere near LSPD’s all-time highs, a significant premium from current levels is enticing investors.

Real Matters Inc. (REAL)

The second-best performer of September was Real Matters Inc. (REAL) whose stock price was up 20% on the month, 45% year-to-date, and 48% over the past year. REAL continues its impressive run over the last year and was last mentioned in the August edition of this blog. The stock has a 52-week range of $4.43-$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.

There was no company specific news that drove September’s share price gains. REAL continues to be highly sensitive to rates and the housing markets. With the US making their first rate cut in September, this likely improved investor outlook for housing market activity generating investor optimism around REAL.

Galaxy Holdings Ltd. (GLXY)

The third-best performer of September was Galaxy Holdings Ltd. (GLXY) whose stock price was up 17% on the month, 68% year-to-date, and 248% over the past year. GLXY has been a highflier with a 52-week range of $4.61-$19.16 but the risks are evident with a beta of 3.17.

Galaxy Digital Holdings Ltd. (GLXY) is a holding company whose only significant asset is a minority interest in Galaxy Digital Holdings (GDH) LP. GDH LP is a financial services and investment management company that provides institutions with a full suite of scaled financial solutions across the digital assets space. Its main focus is on digital assets and blockchain technology, and creating a comprehensive set of solutions for its customers across digital asset trading, lending, investment banking services, asset management, and infrastructure.

While there was little company specific news related to GLXY in September, the stock closely follows Bitcoin and other cryptocurrency price movements. Bitcoin had a strong month finishing up over 9% which is largely why GLXY had a big price jump as well.

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BRP Inc. (DOO)

The worst performer of the month was BRP Inc. (DOO) whose stock price was down 18% on the month, 15% year-to-date, and 22% over the past year. The stock has a 52-week range of $77.34-$108.01

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.

The decline in September was primarily earnings driven. DOO reported EPS of 61c, beating estimates of 44c but declining from prior quarterly levels of $3.21. Revenue came in at $1.84 billion missing estimates of $1.89 billion and declining 34% year-over-year. Lower revenues were attributed to lower volume across most product lines as it continued to reduce its network inventory levels. Operating margins also dropped 470 basis points as a result of the lower volumes. DOO also cut its FY2025 guidance significantly. Revenue of C$7.8 billion - C$8 billion is expected from C$8.6 billion - C$8.9 billion, and normalized EPS of C$2.75-C$3.25 is expected from C$6.00-C$7.00. The results were of course not good and highlight the softening industry demand and transitional period the company is entering, as described in our recent report.

Boyd Group Services Inc. (BYD)

The second worst performer of September was Boyd Group Services Inc. (BYD) whose stock price was down 9% on the month, 26% year-to-date, and 15% over the past year. BYD has had a significant pull back after hitting 52-week and all-time highs of $324.75.

Boyd Group Services (BYD) is one of North America’s largest collision repair center operators in terms of both its scale of operations and revenues. The company has a few separate operating companies across Canada and the US and has a total of 942 locations across 33 US states and 5 Canadian provinces. The company operates in Canada under trade name Boyd Autobody and Glass and Assured Automotive, as well as in US under Gerber Collision and Glass. It is the only publicly traded company that is solely focused on auto collision and glass repair in North America, and it is known to be a consolidator in a highly fragmented market and has strong ties with large insurance carriers across North America.

BYD suffered from continued negative sentiment following weak earnings reported in August where the stock was downgraded by numerous analysts. While results and momentum are not good, we are not entirely out on BYD and forecasts call for significant sales and EPS growth next year.

Earnings in August reported EPS of 56c missed estimates of 61c; revenue of $779.1 million missed estimates of $789.3 million. EBITDA of $89.6 million beat estimates by 2%. Sales rose 3.4%. EBITDA decreased 6.1%. Four locations were added, post-quarter-end. Industry repairable claims were down 7%, but same store sales at BYD only declined 3.2% as it gained market share. Margins improved with cost control. Nothing spectacular here but following earlier stock losses we do not think investors had high expectations going into the quarter, and the stock has firmed up today despite fairly lacklustre earnings here.

Tecsys Inc. (TCS)

The third-worst performer of the month was Tecsys Inc. (TCS) whose stock price was down 8% on the month, up 23% year-to-date, and up 44% over the past year.

TCS provides cloud-based supply chain services for a number of industries across North America. It is the market leader in North America for supply chain solutions for healthcare and hospitals, and management is focused on refining its SaaS software, expanding its healthcare vertical, and evolving its distribution platform. The name has demonstrated strong organic growth, and it has a healthy balance sheet and a strong backlog.

There was no company specific news related to the drop that TCS had. The stock is up so significantly over the last year so the pullback in September was likely just profit taking as it is trading at a 67x forward earnings multiple.

Take Care,