Q: Last year, about this time you listed a number of stocks you thought could do well in the year ahead. The only one of these that I picked up was Savaria, and I’m up about 30%.
I’m now curious about your thoughts on the current valuation, and specifically on the percentage of revenue from US /international and how the cheap CDN dollar will affect SIS revenue.
Thx.
I’m now curious about your thoughts on the current valuation, and specifically on the percentage of revenue from US /international and how the cheap CDN dollar will affect SIS revenue.
Thx.
5i Research Answer:
We still like SIS; it did dip a bit near year end, likely on investor concerns on tariffs. $141M in sales last year (2023) were to Canada, $359M to the US, and $336M to 'other countries'. It is 22X earnings currently, which we would consider neither cheap nor overly expensive. Even with tariffs, analysts expect 30% growth in 2025. The balance sheet is a bit levered but not by a worrying amount. The last quarter was OK but not great. A cheap Canadian dollar could help a bit, with SIS still having significant domestic expenses and substantial international sales. All-in, we think the long term story is very much intact, though there might not be significant short term excitement. We would not expect a 38% gain like in 2025.