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  5. LAS.A: I hold a small amount as a market hedge as the beta is -. [Lassonde Industries Inc. Class A Subordinate Voting Shares]
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Investment Q&A

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Q: I hold a small amount as a market hedge as the beta is -.16. It trades very thinly and has not issued any stock for at least 10 years. Going back 6 years from 2022 EPS did not grow at all. In 2023 EPS grew 63% from a low base in 2022, and sales 8%. For the 1st 6 mo. of 2024 EPS has grown 36% and sales 6%. In the 2nd Q of 2022 "Project Eagle" initiative began in an effort to revive anemic sales and margins in the US. Technically, the chart looks very positive. The company now has its first every non family member in its 106 year history, as its CEO effective September 1 2024. He had a positive 10 year track record at Coke prior to joining LAS.A in 2020. The company held its 1st ever investor day in 2023. Do you think more shares in this company could be purchased here on the confidence that a turn around is in place? Does the rational for holding and potentially acquiring more of it make sense. Please add insights you may have on the company and the sector it operates in.
Thank you.
Asked by John on October 16, 2024
5i Research Answer:

The new CEO, results and investor day are a good start for the company in terms of addressing bored shareholders. The stock reads very well in terms of fundamentals right now and is very cheap. We have always thought it should be privatized. The dividend was doubled earlier this year, and recent results do (finally) give some reason for investors to pay more attention. It is now over $1B market cap, which can generate some more interest. It is far from perfect, but it generates very good cash flow with high free cash flow conversion. It is a highly competitive industry with low margins, and some cyclicality, but LAS has been consistently profitable on an annual basis as far back as our data goes (1992). There are not a lot of public peers in Canada, but it does compete with the usual large multi national consumer companies. We think one could buy it certainly, with a nod to its liquidity and small cap risks. But at current levels, considering its cash flow and balance sheet, we would not see huge risk here. A couple of good news items could see the mulitple move up a few points for a decent gain.