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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Some observations:

ACQ is finally stating that they are concentrating on acquiring dealerships in eastern Canada as opposed to western Canada. This is very good I believe. They are to acquire 6 by May? 2016, having acquired 2 Nissan dealerships in Ottawa, Ontario recently, so 4 more to go.

ACQ has stopped being a dividend grower as there has been no growing over the past four quarters. Stopped as in they had been increasing the dividend every 1/4 since they started paying.

I suspect the glory days are over for ACQ in so far as its rapid share price growth and it has become a more "traditional company" slower grower of revenues..., dividend and share price as automobiles will still need to be bought/sold and serviced for years to come. At least until self-driving autos become dominant.

I think it is "reasonably priced" now. It had gotten way ahead of itself when it was, say, $60+.

Stan
Read Answer Asked by Stan on November 08, 2015
Q: Would you hold off investing in this till at least oil shows a sign of a sustainable rebound? The jobs report that came out said Alberta lost 11,000 jobs overall in October(but Edmonton gained 3000 net I think) and the Canadian economy overall is not that great (Canada did add like 40,000 jobs but over 30,000 were part time) The Canadian dollar falling really hasn't even impacted exports that greatly and manufacturers from the US still say Canada is not competitive enough to reverse the trend. So would you likely wait till next summer to think about investing? I feel as though they bought their dealerships out West at the top of the market and are now buying dealership out east at a possible top. Also I don't really believe that the VW scandal will have no impact on their 5 dealerships, that has to hurt the brand overall, it doesn't matter if it only effects diesels. Also they missed the lowest of the lowered expectations for this quarter when Auto sales in Canada were fairly strong I thought? There was allot of potential here before, but right now I just see too much risk I think, and can't really decide if I should tie money up that may go nowhere for a year that would be better allocated somewhere else. Anyways, thanks ahead of time for your opinions.
Read Answer Asked by Bryan on November 08, 2015
Q: Read the latest report with great interest as it explained the operations of the company to me. It was a revelation to me that there is an argument that could be made that dealerships should be somewhat recession proof given that when new car sales decline, used sales and repairs should increase which shold maintain profitablility That does not seem to have happened with this company.

Given that repairs and financing activities are the most profitable area, is iss possible that ACQ has not proven adept at increasing this side of the business in a way that is better than most? It is one thing to acquire a dealership but it would seem to that the real signs of effective management are the synergies that develop due to the growth. I am thinking of a company like BOYD in this situation which has grown very well.

Are you able to break out how much profit each of their segments contributes? To me, these are the valuable metrics and profits have increased but I am left wondering why the stock has been hit so heavily. Is it because investors really don't understand the business model or is there an expectation that the profits from other lines be growing even more? I do appreciate new sales is a good "headline" number and those sales contribute to earnings but repairs should be a very solid profit gerneator.

Thanks for you insight.

Paul F.
Read Answer Asked by Paul on August 05, 2015
Q: HI,

I bought a small stakee in ACQ(1 %) (after having sold it ata good profit) just in time for it to decline 42 %.I would almost need ACQ to double from here to break even. I am think that either of XTC or GC is more likely to double sooner.
Would selling ACQ and buying XTC with the proceeds be a good idea? I own Amaya (5%) and Magna (1.5%). Or should I just top up ACQ ?

Thanks in advance


Read Answer Asked by Leonard on June 22, 2015
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