Q: Hi, Constellation stock is up over 55% YTD and seems to be breaking out, making new highs, defying analysts' expectations. What, in your opinion, is causing such staller performance ? Where do you see the stock, say in 5 years ? Thank You
5i Research Answer:
We have some comments posted this morning on the company, and there has been recent media attention which may explain the jump somewhat. CSU could be one of the best compounders ever created in the Canadian market in the last two decades. It has a solid business model, is well-run by a strong management team with a track record of value creation, a long runway for growth, capital light, etc. CSU hits all the checklists for a solid compounder. The starting valuation in 2023 was also fair. In addition, CSU continues to show tremendous execution despite a challenging macro environment, analysts have consistently underestimated CSU’s potential over the years.
We might expect around 12%-15% annualized return going forward.