Investment Q&A

Q: Some simple thoughts regarding ACQ's future potential and reason for considering it still a good long term hold.

1). Warren Buffet in the U.S. is buying up dealerships in the U.S. primarily for the same reason that ACQ is using in Canada which is that the dealer principles (owners) or getting old and want out so many are looking to sell so it may be a bit of a buyer's market with a sustainable future (auto sales and repairs).

2). ACQ's present dealership inventory is primarily in the west with a major concentration in Alberta (oil/gas territory). However, I wonder with this lack of Canada wide diversity (they do hold a few dealerships in Montreal and other easterly provinces) will ACQ continue to expand its territory more into the other Canadian provinces? If they do this they will greatly reduce the Alberta affect on their income and bottom line, which would be good.

Only time will tell if they expand significantly outside Alberta and the west in general.

Do you think this is in the cards for ACQ? Or have they suggested indirectly that they will not expand more into central and eastern Canada that I am not aware of or forgot?

Stan

Q: I find this company very frustrating. The stock price fell 20% the week after I purchased it in Jan/14. It then rose to $90.00. Now it has erased all those gains and I find myself underwater by almost 30%. I have this stock as "Consumer Discretionary" but it seem too tied to the energy sector. It represents only 2% of my portfolio and I think oil has a very good chance of taking a step down from here. I am thinking of replacing it with another consumer stock such as ATD.B. Would this make sense or do have another suggestion.

Q: Do you think this stock is being punished too much because of the Western exposure? Would it be a safe buy/hold for 2-3 years?

Thanks,

Paul

Q: Hi Peter and team,
It seems that ACQ is oversold and I'm thinking about starting a new position - it looks attractive to me at $32 range it trades today. What is your advice on this stock in current market conditions: full position, half position, or nothing? In terms of portfolio allocation I have less than 6% in Consumer Discretionary, despite it's indirect exposure to oil prices I assume ACQ should still be considered a CD sector? My timeframe is 3-5 years.
Thanks.

Q: AutoCanada reported after hours. It looks very good to me, what do you think? Adjusted net earnings per share increased by 23% to $2.24 from $1.82. Same store revenue increased by 8.9%. Same store gross profit increased by 7.9%. And in 2015, they filed for a normal course issuer bid to repurchase shares. What is unclear to me is the outlook. They note that consumer confidence is down and retail volumes was down 9% in January YoY.

Q: Your views on the earnings and outlook commentary. Thanks

Q: I believe Auto Canada Inc. is releasing earnings this Thursday. Their stock is down ~14% in the last month on no news and all reports are that cars are selling as well as ever so I’m thinking that there is an opportunity here for a quick profit. Would you agree?

Q: Would ACQ be a good stock to have in my Portfolio.Eddie.

Q: Could you provide your thoughts on ACQ? It's appreciated in value significantly over the past 3 weeks, from $35 to $50. Do you see an upward trend taking hold, or do you expect it to remain volatile, and vulnerable to a drop in oil prices back below $50?

Thanks.

Q: Hello,
What do you think of the level of ACQ now? ... Still the effect of crude ?and the high concentration of dealer alberta...the history of the conflict of interest?

I do not think it is a value trap ... but do you think it's a $ 35.50 entry point?

thank you

Q: I had a 6.3% position in ACQ which is now down to 4.8%. In such situations what would you recommend. Would you add another 2.5% or maintain the current position.

Q: Follow-up to Matthieu's question:
My layman's understanding of the car dealerships has always been that they make relatively little profit on actual car sales but rather on follow-up service and repairs. If that is the case, it would seem to me that any "temporary" (e.g. < 2 years)reduction in Alberta car sales should not have a drastic effect on dealership profitability. Consequently, I do not understand why ACQ stock is being hammered so severely in the current environment. On the contrary, it now seems to be a good buying opportunity.

I would appreciate your comments. Thanks!

Q: Yesterday, reports from different sources started coming out saying that canadian auto sales are doing great. Can we therefore expect their next quarter to be great? Or do you think that it is likely that the dealers that did well are those outside of Alberta and since the company has most of its dealers in Alberta, we might see little positive impact? I suppose it depends on how confident people in Alberta have been feeling about a rebound in oil and in the safety of their job.

Q: Hi Peter, Do you think ACQ is getting beat up unfairly considering that's it's now trading at 12.2X Forward P/E (Yahoo)? At the current price, do you suggest to add more to an existing position (4%-5%)?

Q: Hello, I originally bought ACQ at 81 dollars. It was 2 percent of my portfolio. It fell to 48 dollars today which is about 1 percent of my portfolio so I just bought enough to bring it back up to two percent. Was this a mistake? Why had it fallen do much? I thought low gas prices usually equated to an increase in car sales?

Thanks,

Carla

Q: Hi team, This is regarding my earlier question today about ACQ. Just read the article you send: "Auto loan bubble" from the Fin. Post. I would imagine any defaults in car loans would affect ACQ. Your thoughts please. Thank you!

Q: Hi team, ACQ still under performing other auto related companies like LNR, BYD.un, MG. Any new events you know of? I would like to add to it......still a buy in your view? Thx a lot!

Q: I understand the Q3 report showed a dip in new car sales which spooked the market a bit. With the sharp decrease in the oil and gas market, I wonder if the Prairies will experience a downturn (or sideways) movement in the economy, or at least give the perception of tougher times. New car sales might be the first to suffer. This could cause some negative news for the next few quarters. On the other hand ACQ might pick up some cheap acquisitions. I love the company but I wonder if it might be best to get out until the dust settles. I would appreciation your advice.

Q: BNN refer to where stocks are as pertaining to the moving averages. On my Globe Invest charts, I could bring up a 200 day moving average over six months, and the stock could be below it. If I extend that chart out farther (1 year, 5 years, etc.), the stock could be above it. What is the time frame of the charts that they use?
Here's a second small question: ACQ has been declining the past few days. Where do you think it will bottom out? I thought I got a good deal when it dropped off and I picked it up at 62.
Thank you,
Dennis

Q: Comparing Magna (MG) and AutoCanada (ACQ), which would you prefer? I would have thought that they would trade similarly, but MG has recovered since the recent correction, while ACQ still seems to be floundering. Would you ever rotate between the two if, for example, you owned MG? Thanks!