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Canadian Natural Resources Limited (CNQ)
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Parkland Corporation (PKI)
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Alimentation Couche-Tard Inc. (ATD)
Q: Hello 5i team,
Welcome your feedback on PKI vs. CNQ and ATD moving forward? I've held PKI on and off for 11 years. I'm sitting with a 9.4% per annum total return and a 25% cap gain on cost. Plenty of drama between hostile shareholders and board. Shares appear dramatically undervalued. When comparing to CNQ and ATD (also holding) I'm considering abandoning PKI and investing proceeds into more CNQ and ATD. Pay the tax and move on reluctantly... Can you share your thoughts on this notional transaction vs. holding on to PKI while still quite "undervalued" to wait/see how the drama plays out or just move on? Thanks for your opinion and all you do.
Welcome your feedback on PKI vs. CNQ and ATD moving forward? I've held PKI on and off for 11 years. I'm sitting with a 9.4% per annum total return and a 25% cap gain on cost. Plenty of drama between hostile shareholders and board. Shares appear dramatically undervalued. When comparing to CNQ and ATD (also holding) I'm considering abandoning PKI and investing proceeds into more CNQ and ATD. Pay the tax and move on reluctantly... Can you share your thoughts on this notional transaction vs. holding on to PKI while still quite "undervalued" to wait/see how the drama plays out or just move on? Thanks for your opinion and all you do.
5i Research Answer:
While the corporate fight provides an interesting backdrop, we do not like making investment decisions on the 'possibility' of something happening. While ATD and PKI have some similarities, CNQ of course is very different (we have some comments on CNQ posted today). At 12X earnings, PKI is certainly cheap. But debt is high and it has not seen a lot of earnings growth. It does have plans to double its cash flow by 2028, and has initiated plans to sell its Florida assets to help its debt burden. BUT..... at the end of the day, we believe both ATD and CNQ are better companies/stocks. We can't get personal, but WE would be comfortable with the switch as outlined in the question.