V O T E D T H E W O R L D ’ S B E S T I N V E S T M E N T A D V I S O R Y

By Mark Halpern

You worked for years tobuild your business andthen you sold it when thetime was right. Daily ritu-

als have changed irrevocably asyou embark on the next chapter ofyour life, no longer unlocking thedoors every morning, chattingwith staff, pumping up your salesteam and a hundred other thingsbefore locking up at the end of theday. Life has certainly changed,and you may feel a bit uncertainabout your financial future.

Hopefully, the sale of yourbusiness garnered the financial

rewards you wanted. Your familyneeds your help and you’ve beenthinking for some time about howto pass on your wealth to yourchildren and grandchildren in themost tax-efficient way possible.Regular readers already knowthat choosing to be charitablemeans the tax department will getless of your money, so it justmakes sense to build a charitablelegacy into your plans whiledemonstrating philanthropic val-ues to your family.

OK, but how do you do this?First, be prepared for what

could be a great adjustment. Rec-ognize your new reality as a re-t i r e e a n d t a k e a d e e p , l o n gbreath. If you had been buildingup your business for decades, notgetting up every morning to go towork can cause major disrup-tions and create a void that youhadn’t expected.

Indeed, many entrepreneursfind the first 12 months after thesale to be the period of greatestuncertainty, as they consider what

to do with the sale proceeds andhow to move on with life. Themore a business owner is tied tohis or her company or associatedwith its brand, the more difficult itis to make the transition.

Then there are those whohave sold their business andstayed on to work for the newowners. Coming in to work everyday as an employee could betough after years of being theboss, but having the sale pro-ceeds in your bank account easesthe adjustment (pain) of listeningto the new person in charge.

Many entrepreneurs and busi-ness owners build other, parallelassets like real estate, private equi-ty and investments. If someone inthe business was looking afterthose assets for you, you may beforced to seek an outside trustedprofessional to help you.

Experts say a good transition isa process, not an event, andshould take place over a few years

I’ve been in the investment in-dustry since 1990. In my ear-ly years, I was an investmentadvisor working with IIROC

(Investment Industry RegulatoryOrganization of Canada) firms likeMidland Walwyn, Merrill Lynchand CIBC Wood Gundy.

In 2007, I became a discre-tionary portfolio manager and be-gan running a platform that we atValueTrend continue to run as anequity model. Prior to becoming aportfolio manager and eventuallymoving to operate my own firmunder OSC (Ontario SecuritiesCommission) regulation, I used totrade some very select stocks in adifferent manner than the “regu-lar” strategy I used for the majori-ty of my clients. These early clientsfondly remember my tradingthese lower liquidity growth orien-tated securities during the 1990s.Some have inquired about such anoffering at ValueTrend.

The current challenge that Val-ueTrend faces in providing suchan offering is liquidity. Back in theearly 1990s, I had a small group ofclients who had committed a rela-tively small amount of capital tothis more aggressive trading style.

It was easy to get in and out ofthe positions given the smalleramounts of capital I was trading.

ValueTrend didn’t want to

launch this platform until we werefully confident of the strategy –one that would have the potentialto provide better returns than aconservative strategy, yet still of-fered ample liquidity within ournow much-larger greater assetbase. And now, at long last, we areoffering this strategy to the appro-priate clients.

Today’s article will outline thethree strategies we will be utilizingwithin this platform. Rather thanbeing a “product pitch” – I wouldexpect that you will gain some in-sight on how you can incorporatesome trading rules suited to themore aggressive securities thatyou might be exploring. Below is adescription of our strategies with afew examples of how we might uti-lize them. I hope you gain insight

for your own trading from ourstrategies.

Swing trades (3 days-4 weeks):Swing trades will typically involvevery short holding periods –oftenonly days or weeks.

Buys within the swing tradingstrategy will be determined byconcurrently occurring oversoldsignals on a daily chart via:

• Lower Bollinger Band touch(2 standard deviations from a 20-day Simple Moving Average)

• Lower Zone RSI (Mid-termedoversold price momentum, lowerzone below 30)

• Lower Zone Full Stochastics(Short-termed price momentum,lower zone below 20)

Sells are determined by the op-posite signals from a buy per theabove. That is, a touch of the up-per Bollinger Band, and move-m e n t s b y R S I a b o v e 7 0 ,Stochastics above 80. We do notuse stop-loss orders, however astop-loss sell signal will be a movebelow the last significant supportlevel on the daily chart.

The top chart on the next pageillustrates the S&P/TSX compositeindex from May 7, 2018 to April 1,2019. On it are marked thebuy/sell signals for that index us-ing this system. By legging in and

Three strategiesfor high-growth stocks

By Matt Kornack and Tal Woolley

Real estate equities aretracking the index rela-tively closely year-to-date.As a group, they are up 15

per cent on a total return basis,slightly under the TSX composite at16 per cent (the underperformancea result of a very weak trading dayon April 16). The performance ofsome rate-sensitive sectors hasbeen consistent (such as financials,up 15 per cent, and utilities at 17per cent). Others have been weak-er (such as communication ser-vices, up 11 per cent).

With lower capitalization rates,we have a little more “gas in thetank” to rethink valuation; conse-quently, we have realigned our tar-get prices. Our base case continuesto be that rates remain low, but willgrind slowly higher over time intandem with economic growth,and that the sector will ebb andflow on this rate volatility.

Our National Bank Financialeconomics team has reduced theirrate expectations over the last year,but still remains more hawkish onyields going forward (for example,estimating a 2.83 per cent 10-yearyield one year out).

We do see a few themes that

Aggressive securities demand you invest with different trading rules than more stable equities

You sold your business; now what?

See Halpern on page 178

As of press time,the S&P/TSXcomposite indexwas still hover-

ing near the all-time highit set on April 22, up al-most 16 per cent year-to-date, and the secondquarter has hardly started!

Market euphoria is notjust confined to Canada.The S&P 500 is up morethan 17 per cent year-to-date; so is the Euro Stoxx50. Japan’s Nikkei 225 hasgained more than 13 percent as well. Anyone bit-ing their nails over Chinawoes may find peace inthe fact that Chinesestocks have bounced backtoo. All of that recoveryhas occurred in 2019; theShanghai composite is upnearly 30 per cent year-to-date.

Tech stocks are clearlybenefiting from the opti-mism. Microsoft Corp.joined the exclusive “four-comma club” on April 25.Microsoft shareholderscheered as its latest quar-terly results pushed mar-ket capitalization aboveUS$1 trillion for the firsttime, the third companyto do so (Apple Inc. andAmazon.com Inc. sur-passed that mark in 2018).

While many investorsmay be weighing thehottest stocks’ potentialto reach even-higher all-time highs, they maywant to consider Canadi-an preferred shares,which are still smartingfrom their last marketpummelling despite be-ing tied to some of Cana-da’s strongest companies(read more in our “bestbuys” section). – R.P.

REAL ESTATE ON RISE

NationalBank REIT

outlook getshawkish

EDITOR’SNOTES

The bullpen has shrunk slightly in thetwo weeks since we last examined theSentiment Pie. At 53.9 per cent last is-sue, the bulls’ share shrinks 50 basispoints to 53.4 per cent. Meanwhile,the bears have also retreated some-what. The bear cave now makes up18.4 per cent of the pie, down from19.2 per cent. The uncertain marketwatchers’ ranks grew from 26.9 percent to 28.2 per cent.Source: Investor’s Intelligence.

THE SENTIMENT PIE

May 10, 2019 Vol. 51, No. 9. Pages 177-196 $6.00

\

See Richards on page 179 See Kornack and Woolley on page 179

KEITH RICHARDS

Bulls53.4% Unsure

28.2%

Bears18.4%

to allow entrepreneurs tothink about what theywant to do and how to goabout it. According to a re-cent study, for two-third ofpost-sale entrepreneurs, ittakes at least two years tomake the transition.

When it comes to dealing withthe financial aspects of your future,a smart first step is sitting downwith an experienced professionalplanner to develop financial andestate plans. This is the time to getpersonal, determine your needsand set priorities in retirementwith a new plan to help accom-plish your goals.

A study by RBC Wealth Man-agement reported that just overhalf the people canvassed had awill in place. Meanwhile, one inthree had done nothing at all toprepare for passing their wealth onto the next generation.

What to do withthe proceeds

According to one survey, manyentrepreneurs who sold their busi-nesses invested at least some of theprofits from the sale within the first12 months; others put the moneyin the bank for a year. About 20 percent invested the funds in a newbusiness.

After you have set your retire-ment objectives, evaluated yourrisk tolerance and calculated howmuch income you will require ev-ery year, the sale proceeds can beinvested confidently in a well-planned asset mix with appropri-ate rates of return and taxconsiderations.

The next step in the process isto translate your plans into a solidnumber – how much you will needto fund your retirement.

Much has been written abouthow much money is needed for re-tirement. Estimates range from 46per cent to 70 per cent of your pre-retirement income. There is nocookie-cutter solution, because allof it depends on you, what youwant to do in retirement and howyou want to spend your money.

When it comes to their financialplan, people in retirement (includ-ing those who didn’t have a busi-ness to sell) are sometimes toorisk-averse to invest in anythingother than ultra-conservative, low-yield and highly-taxed assets likeGICs. This approach, they reason,will provide much-needed stabili-ty, limit downside risk and deliverreasonably consistent rates of re-turn overall. Unfortunately, the netafter-tax returns are paltry.

In these days of low interestrates and high taxes, you mightwant to consider alternative in-vestments in unique financial in-struments that continue to enjoyspecial tax-free treatment underCanada’s Income Tax Act, namelyLife Insurance products.

These products are worth con-sidering:

• Annuities;• Insured Annuities;• Segregated Funds;• Permanent Life Insurance;• Joint and Last-To-Die Life

Insurance;• Long-Term Care Insurance;

and

• Best Doctors® Insur-ance Global Medical CareTM.

Comfort is a key con-sideration in any invest-ment plan. The last thingyou need to do is stayawake nights worryingabout the soundness ofyour investments.

Managing your ownbusiness was a full-time job atwhich you excelled. You may notbe quite as astute, or successful, inyour new role as portfolio manag-er presiding over the proceeds ofyour business sale. Consider en-gaging professional help to man-age that hard-earned money.

A sound plan needs professional help

Many people believe that theycan sell their current home, espe-cially in this overheated housingmarket, then downsize and use thedifference for investing. But that allhinges on where you live, your pre-ferred lifestyle and your general fi-nancial position.

It’s quite possible that your cur-rent estate plan, including your willand insurance arrangements, don’tmatch your new life. The life insur-ance you bought in the past maynot be appropriate today. Figura-tively speaking, your old financialfurniture doesn’t fit your currentarchitecture.

A proper will puts you in chargeof what eventually happens to yourassets. You can direct who getsw h a t a n d w h e n . I n m a n yprovinces, if you die without a will,the courts alone will decide how todivide your assets. Your spouseand children will have no say inthose decisions.

A recent study of wealthy Cana-dians revealed that only one in fourhad a full strategy in place fortransferring their wealth to subse-quent generations. One in threesaid they hadn’t done anything inthat regard.

Developing an estate plan whileyou are alive will preserve and pro-tect your assets as well as directhow they are distributed upondeath. Most importantly, your planwill maximize the size of your es-tate by incorporating strategies tominimize the taxes that can quick-ly erode your financial legacy.

Former business owners shouldcheck out products such as pre-scribed rate loans to help in in-come splitting to reduce the overallfamily tax bill. You may want toconsider an alter-ego trust that al-lows you to defer tax of capitalgains until the assets are sold oryou pass away. You must be 65 orolder and the sole beneficiary of allincome or capital of the trust dur-ing your lifetime.

These trusts also avoid probateand legal fees on death, providepotential creditor protection andenable the transfer of assets to thetrust without being taxed on capi-tal gains.

Be charitable

Several opportunities to becharitable (and tax-savvy) areavailable. The CPP Philanthropy™strategy, explained in my Novem-ber 2017 Investor’s Digest article,allows you to use your monthlyCPP benefits to fund a large life in-

surance policy whose proceeds willbenefit both your estate and thecharitable causes you care about.

Many options are available tosave on taxes now, or later, whenyour estate is being settled.

As a society, we are all very for-tunate to be living longer. But froma financial perspective, we needmuch more money to live longer.Many financial planners maketheir recommendations based on alife expectancy of age 90. Whathappens if you live to 100? Where’sthe money coming from to coverthose unexpected years?

As we age, our topics of conver-sation with friends and family alsomature to include health issues,medical appointments, medica-tions and treatments. Naturally, webecome concerned about lookingafter ourselves.

There is a 30 per cent chanceyou will need long-term care at age65 and a 50 per cent chance by age75. Going into a long-term care fa-cility easily costs $10,000 permonth.

Staying put in your own homegets very expensive if you require24-7 care. Many people mistaken-ly believe that our overworked uni-versal health-care system will coverthe health costs associated with eyecare, drugs, physiotherapy andnursing homes.

Long-Term Care Insurance isan inexpensive defensive strategyto preserve your capital, and somepolicies feature a return of premi-um (ROP) option that pays back allof your premiums if you don’tmake a claim.

You have gone through a majorchange – you’ve sold the businessthat took up a huge part of your life.Just as you made careful decisionswhile building, growing and thenselling your company, this is thetime to consult a professional advi-sor to guide you through the pro-cess of making thoughtfuldecisions for the rest of your life.

Give us a call. We would bemore than happy to help.

Mark Halpern is one of Canada’stop life insurance advisors, a Cer-tified Financial Planner (CFP),Trust and Estate Practitioner(TEP) and CEO of WEALTHin-surance.com®. He guides suc-cessful business owners, who arealready challenged for time,through the complex process ofensuring the people and organi-zations they care about are takencare of. If you are like his othersuccessful business-ownerclients, you are looking to reduceyour tax obligations, preserveyour wealth and leave a legacy.Incompletions rob us of energy.Mark collaborates with your pro-fessional advisory team toachieve your desired outcomes.His approach is simple. Hemakes sure what is important toyou gets done. He gets you orga-nized, provides a big picture viewof your financial affairs, deter-mines your strategy and helpsyou take action. He will simplifythe complicated, so you and yourfamily can rest easy. He can bereached at 416-364-2929, toll-free at 1-866-566-2001 orMark@WEALTHinsurance.com.Visit WEALTHinsurance.comand get your FREE Estate Plan-ning Toolkit at WEALTHinsur-

ance.com/toolkits.html. The 2018Toolkit now includes: Estate Di-rectory Estate Planning ChecklistExecutor Duties ChecklistBusnessOwners Planning Guide . VisitMarkHalpernBlog.com and signup for free updates.

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IN THIS ISSUE3M................................................................193AbbVie.........................................................194Acreage Holdings.......................................184Akumin .......................................................190Allied Properties REIT ...............................179Altria Group................................................194American Express ......................................194Aphria .........................................................195ARC Document Solutions.........................194Ascendant Resources ................................189AutoCanada................................................186Axis Auto Finance ......................................184Barrick Gold ...............................................189BlackBerry ...........................................179,184BP PLC ........................................................195Brookfield Asset Management Inc.

Preference Shares Series 26..................187Brookfield Infrastructure Partners LP .....194BRP..............................................................191BTB REIT ....................................................179Calian Group..............................................188Carvana.......................................................194Centric Health............................................191Chartwell Retirement Residences............179Cogeco Communications.........................189Cohen & Steers Infrastructure Fund .......195Cohen & Steers Realty Shares Fund ........195Cominar REIT ............................................179Conifex Timber ..........................................187Corus Entertainment .........................189,195Cresco Labs ................................................192Crombie REIT ............................................179Delta 9 Cannabis........................................187Dow .............................................................193Dream Office REIT.....................................179Enbridge .....................................................195Encana ........................................................191Enterprise Product Partners LP ...............194Fortress Global Enterprises ......................190Gibson Energy............................................185GlaxoSmithKline PLC................................194Goodfood Market ......................................187H&R REIT....................................................179HEXO ..........................................................188Hilton Worldwide Holdings .....................194InVitae.........................................................195Jaguar Mining.............................................186KraneShares CSI China Internet ETF ......179Largo Resources..................................191,194Lightspeed POS..........................................190MediPharm Labs .......................................191MedMen Enterprises.................................195Minto Apartment REIT .............................182Mosaic.........................................................193NEO Lithium ..............................................186Neo Performance Materials .....................188NextEra Energy ..........................................194Nike .............................................................193Novan..........................................................194Onex ............................................................188Paddy Power Betfair PLC ..........................194Park Lawn...................................................184PFB ..............................................................190PROREIT.....................................................182RioCan REIT...............................................179Roots ...........................................................185Roxgold .......................................................186Royal Dutch Shell PLC ADR......................195Schlumberger.............................................195Shaw Communications ............................195SNC-Lavalin Group ...................................189Standard Life Aberdeen PLC ....................195Stornoway Diamond .................................189Summit Industrial Income REIT.......179,182Superior Gold.............................................184Tandem Diabetes Care .............................195Terra Firma Capital ...................................188Tesla ............................................................193Theratechnologies.....................................189TransCanada Corp. Preferred

Shares Series 9 .......................................187Tricon Capital Group ................................179Trulieve Cannabis......................................185UDR.............................................................195VersaPay .....................................................184Village Farms International......................188Wajax...........................................................192Walt Disney ................................................193Wasatch-Hoisington U.S.

Treasury Fund........................................195WCM Focused International

Growth Fund Investor Class.................195Welltower....................................................195Wingstop.....................................................193WPT Industrial REIT..................................179

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Halpern from front page

Translate plans into a dollar figure

Mark Halpern

may stand out in the first quarter:• Multi-family vs. Old Man

Winter: The winter weather mayhave put some modest pressureon operating expenses through-out the first three months of theyear, which could create somevariance versus consensus, butthis is unlikely to be enough of afactor that would really changeour views. This risk can also ex-tend to Cominar REIT (CUF.UN-TSX, $11.37) and BTB REIT(BTB.UN-TSX. $4.86), since theystill have some gross leasing ex-posure in Quebec.

• Senior housing vs. the flu: Na-tionwide flu outbreaks in long-term care facilities are downsignificantly this year. As well,dominant flu strains this year im-pact the young more than the el-derly. This could lead to someoperational upside across thegroup and aid in leasing.

• Development completions in2019: There are a few names wherewe think positive developmentcompletions over the balance of2019 could enhance a more bullish

view, or even alter sentiment.These include Crombie REIT

(CRR.UN-TSX, $14.36), which isbuilding Davie in Vancouver; Ri-oCan REIT (REI.UN-TSX, $25.76)with its Kingly, ePlace and eCen-tral projects in Toronto, H&RR E I T (HR.UN-TSX, $22.64) ,building Jackson Park in NewYork City; Tricon Capital GroupInc. (TCN-TSX, $10.70) with TheSelby in Toronto; and ChartwellRetirement Residences (CSH-TSX, $14.68) with The Sumach inToronto.

The Crombie and RioCan devel-opments are important as “proofsof concept” for their nascent multi-family businesses.

H&R’s Jackson Park project willbe interesting to follow given itssize and the euphoria/disappoint-ment cycle it went through withthe Amazon HQ2 saga.

Tricon’s Selby is important toestablishing credibility for and enhancing the valuation of the balance of its future Canadianm u l t i - f a m i l y d e v e l o p m e n tpipeline. And finally, The Sumachis important, as it is Chartwell’sfirst chance to see how a more

“Quebec-style” seniors apartmentbuilding works in Ontario.

We do not expect a materialdeparture in 2019 first-quarter op-erations relative to 2018’s fourthquarter. Looking at each segment:

Retail: Over the past severalyears, the Canadian retail REITshave had to work through severallarge, challenging retail bankrupt-cies (Sears, Target). While somesmaller retailers have announcedbankruptcies and store closures(Payless, Ann Taylor), we notethat these store closures shouldgenerally be more manageable,given smaller footprints and low-er exposure within the publiclytraded universe.

Overall, we expect stable or-ganic growth from our retail uni-verse, consistent with what we sawin the last three months of 2018,namely average same property netoperating income (SP-NOI)growth of 2.1 per cent.

Office: Fundamentally speak-ing, downtown Toronto and Van-couver should remain strong,with leasing spreads on renewaland turnover in the high-single-to low-double-digit percentages.

This is mostly a downtown phe-nomenon as suburban marketscontinue to see higher vacancyrates (nationally, not just in thesetwo regions).

A l l i e d P r o p e r t i e s R E I T(AP.UN-TSX, $47.81) should seesome slowing in organic growthlevels, however, as occupancygains will be limited going forward(the portfolio is essentially full) –the mission critical portfolio beinga wild card. The market will con-tinue to grapple with pricing de-velopment deliveries after 2021and how this will impact vacancyand rent appreciation for Alliedand Dream Office REIT (D.UN-TSX, $23.24) in particular.

Industrial: Industrial remains a“hot” asset class nationally, notjust regionally. Availability rates inmultiple Canadian markets are athistoric lows, and rents have beenadjusting faster than we wouldhave previously expected.

This gives us some confidencethat 2019 organic growth figuresfor Summit Industrial IncomeREIT (SMU.UN-TSX, $11.57) willaccelerate from somewhat disap-pointing results in 2018. WPT In-

d u s t r i a l R E I T (WPT.U-TSX,US$13.65) should put up solid fig-ures as well, but potentially lag-ging its Canadian peers.

While near-term prospects arebright, the prospect of an eco-nomic correction or reduction induplicative space requirements byretailers rationalizing their supplychains in an e-commerce domi-nated world could possibly threat-en the long-term outlook.

Multi-family: While weathermay muddy the waters when look-ing at multi-family performance in2019’s first three months, we focusmore on rent growth than margins(and our estimates are reflective ofthis as we aren’t building in signif-icant improvement in margins go-ing forward). Regardless, weexpect this to again be the seg-ment with the best operating per-formance given shorter leaseduration and positive fundamen-tals (notwithstanding the slowerturnover and snowy or generallycold weather).

Matt Kornack and Tal Woolleyare equity research analysts atNational Bank Financial.

out in two- to three-trade incre-ments (i.e. _ to 1/3rd of the allottedcapital for this trade deployed/sig-nal), it provided good short-termedentry and exit strategies, had oneused an ETF that mimicked the in-dex. The manager’s discretion willdetermine if the trade will be donein increments and at what percent-age allocation.

Mid-termed trades (4 weeks-6months): Technical analysis willbias decisions, but fundamentalswill be respected as value or growthcatalysts. Buys and sells within themid-termed trading strategy will bedetermined by chart patterns on aweekly and/or daily chart. Thesepatterns include:

• Traditional breakout patternsfrom a technical base; or

• A bounce off the lower supportzone within a sideways trading pat-tern.

Equities, ETFs and commodityETFs will be reviewed for thesetrades. A fundamental undervalu-ation or higher growth potentialare criteria in the case of an indi-vidual equity (that is, not a com-modity or ETF).

If we believe a catalyst is immi-nent in the next 30 days to sixmonths, we will buy a position inthe security so long as the technicalprofile is bullish. Sell at technicaltargets. Stop-loss sell signal will bea move below the last significantsupport level on the chart.

The China Internet fund thatKraneShares offers, the Krane-Shares CSI China Internet ETF(KWEB-NYSE/Arca, US$48.50)looks to be a typical mid-termedtrading setup (see middle chart). Af-ter breaking out of a technical basethat followed a downward trend(lower dashed line), the ETF targetsthe higher dashed line.

The relatively fast movementson this chart indicate that future

targets, should they be met, mayoccur over a few months.

Longer-termed trades (6 months-plus):

Longer termed trades will typi-cally have an equally weighted biasof technical and fundamental anal-ysis for entry or exit timing.

The strategy will examine tradi-tional technical basing patterns, orcontained trading patterns. A testof a mid- to long-termed trend linewill signal buys. Fundamentalanalysis will focus on longer-termundervalued stocks or those withmid- to-longer-termed growth po-tential. A longer-term track recordof continuous proven growth andstability is not necessary.

We will be looking for the futuregrowth potential which may be un-derappreciated in the current envi-ronment. Our intention will be toinvest in securities that have an in-trinsic value much higher than cur-rent valuation. As with mid-termedtrades: Sell at technical targetswhich could include technical re-sistance or upper trend channellines. A sell will also be triggered bya break in trend.

The stop-loss sell signal will bea move below the last significantsupport level on the chart. Black-Berry Ltd. (BB-TSX, $12.04; BB-NYSE, US$8.91) (see bottom chart)is a good example of a stock thattraded between 2012-19 within atrend channel. You can see the buyand sell points on its chart below.

The swings typically occur overa one- to two-year time frame.

For those interested

Our ValueTrend AggressiveGrowth Strategy (VTAGS) official-ly goes live on June 1, 2019. TheVTAGS strategy will not be offeredas a standalone product for newclients; you must hold a minimumof $500,000 in family assets withus diversified through our other

platforms. If you are interested,please contact either Craig Au-coin, our fundamental analyst, ormyself at ValueTrend for a full de-scription of the VTAGS and to dis-cuss how we can administer yourentire portfolio needs.

Keith on BNN Bloomberg

Keith’s next BNN Bloombergtelevision appearance is onWednesday, May 1 at 6 p.m. Keitha p p e a r s r e g u l a r l y o n B N NBloomberg’s Market Call to answerviewer questions about the techni-cal analysis of stock trends, and toprovide unique insights on the fac-tors of technical analysis used insuccessful investment manage-ment. (Note: Times and dates maybe subject to change.)

If you have questions about thetechnical analysis of stock trendsfor individual stocks, be sure tophone in with your questions toKeith during the show. Call toll-freeat 1-855-326-6266 or email yourquestions ahead of time (specifythey are for Keith) to market-c a l l @ b n n b l o o m b e r g . c a .

Keith Richards is Chief PortfolioManager & President of Value-Trend Wealth Management. Hecan be contacted at info@value-trend.ca. He may hold positions inthe securities mentioned. The in-formation provided is general innature and does not represent in-vestment advice. It is subject tochange without notice and isbased on the perspectives andopinions of the writer only. It mayalso contain projections or other“forward-looking statements”.There is significant risk that for-ward-looking statements will notprove to be accurate and actualresults, performance, or achieve-ments could differ materially fromany future results, performance, orachievements that may be ex-

pressed or implied by such for-ward-looking statements and youwill not unduly rely on such for-ward-looking statements. Everyeffort has been made to compilethis material from reliable

sources; however, no warranty canbe made as to its accuracy or com-pleteness. Before acting on any ofthe above, please consult an ap-propriate professional regardingyour particular circumstances.

Issue 9 / 19 I N V E S T O R ’ S D I G E S T May 10, 2019 / 179

KWEB may be forming typical mid-term setup

Kornack and Woolley from front page

Crombie, RioCan projects key ‘proofs of concept’

Richards from front page

I N V E S T O R ’ S D I G E S T

INVESTING 101EXPANDING YOUR INVESTMENT KNOWLEDGE

Excerpted with permission of au-thor. All rights reserved.

Even with severe marketfluctuations, the benefitsof income growth invest-ing are real and substan-

tial. Remember, with income in-vesting we are not watching theprice of the stocks, but the incomethose stocks provide. And this iswhat I want you to understand.

By investing in "income-earn-ing" stocks (which I will discuss lat-er in this book), you will see yourincome grow each year regardlessof how much you invest, whetherthe market is up or down, even ifyou stop adding funds to yourholdings. Of course, your incomewill grow faster the more you in-vest, but the ultimate goal is alwaysincome growth. Did I forget tomention price? No, because oureyes are on the income.

Once you’ve started saving foryour future, I suggest the next stepis to develop an investment strat-egy. Here you have lots of choices,but where to start and which tochoose? Do I start buying stocksand try to sell when they rise 15per cent? Do I follow BNN MarketCall and select their recommend-ed three picks? Do I buy a group ofexchange-traded funds (ETFs)and hope for market returns, or doI try to figure out how to start aValue or Growth portfolio becausemy ultimate goal is to beat themarket return?

That’s the problem many in-vestors face and, unfortunately,the majority will lose money try-ing to make guesswork their mar-ket strategy. Yes, money can bemade, it has been done, but thosethat succeed will often be a smallminority.

Investing for income (divi-dends) means you will look forcompanies that pay you dividendsfor buying and holding theirshares. To achieve a growing in-come, the company should in-crease the dividend over time,thereby providing you with moreincome for each share you own,and not requiring you to sell sharesto receive the higher income. Yourincome will be generated fromholding "individual" stocks, not abundle (i.e., exchange-tradedfunds) which will most likely in-clude mediocre stocks.

My strategy works when you

hold only quality equities with atleast 10 years of positive growingearnings and a history of passingalong a percentage of those earn-ings to the shareholder.

Why not just buy an ETF? ETFs are fast becoming the

choice of many investors. Theyare a way to have a diversifiedportfolio of stocks or bonds in asingle investment and can betraded just like a stock. The feesare low and they offer vast diversi-fication, a way to "cover all thebases", if you will.

Some suggest that if you ownaround three to five ETFs you’llcover the entire Canadian, U.S.,Emerging and International mar-kets. However, there are now about22 Canadian ETF providers and495 ETFs available to choose from,with new ETFs coming out almostweekly. Considering ETFs can con-tain hundreds, if not thousands ofindividual stocks, it is no longer asimple choice, is it?

Let me say that there is no bestmethod to invest and ETFs may bea reasonable choice for those whohave set market returns as their ob-jective. But, from an "income" per-spective, I do have a few objectionsto them, mainly because: Theyhold too many stocks, the good,bad and in-between, which mustresult in average or lower incomeand returns,

You have no control over thestocks chosen or their weightingwithin the ETF (for example, onestock may be 3.5 per cent, whileanother .05 per cent). The fundneeds to trade (constant buyingand selling) to rebalance.

Most ETFs try to match the per-formance to the market or indexthey represent. Since the financialcrisis of 2008, the market has gen-erally been on an upswing. But I dowonder how ETFs will do duringthe next major correction or ex-tended sideways market.

Personally, I do not think theywill do well. Remember, if our ob-jective is long-term incomegrowth, you will find that ETFsdon’t provide the income growththat individual stocks do.

As I’ve said before, not all divi-dend growth stocks are createdequal, and after my own successesand failures at "stock picking" I be-gan to direct my research specifi-cally to figure out just how to min-imize risk and maximize results. If,

like me, you’ve read other invest-ing books, you may wonder howanyone could simplify the processof selecting and evaluating stocks.Well, you are in for a surprise, be-cause I found it so simple I wonderwhy everyone does not do it.

Your Ever Growing Income:The Rising Yield on

Investments

By Henry Mah

Henry Mah Copyright 2018

$17.33, 148 pages

The steps are so simple, that ifyou answer "yes" to the very firstquestion on any stock you’re re-searching, then you do not needto proceed further. The stockwould be immediately eliminat-ed as a quality dividend growth(DG) stock.

The other three questions canbe considered guidelines and arenot as fixed as the first.

The Four Guiding Rules: Hasthe company cut their dividend inthe past 10 years, Yes or No?

Has the company paid a divi-dend for a minimum of 10 years(25 or more is even better)?

Has the company had a consis-tent record of raising their divi-dend for 10 years (The more oftenthe increase, the better the stock).

Has the dividend grown overthe past 10 years by at least 75 percent?

When there is a sudden or ex-tended drop in the dividend growthrate one should try to find out why.Have earnings dropped? Has thecompany made some large capitalexpenditure? Has there been a large

loss or lawsuit? The question is, canthe decrease be explained, and is itexpected to continue or is it a short-term adjustment?

The lower the yield, the less cur-rent income, but if the dividendgrowth is at a higher rate, then overthe long term, the dividend growthwill likely drive the price of thestock higher.

Payout ratio is the portion ofthe company’s annual earnings be-ing paid out as dividends. Let’sconsider a company’s payout ratio.For most companies 60 per cent to75 per cent is a reasonable maxi-mum, but utility companies usual-ly go higher, around 80 per cent.Because they often have long-termagreements and regulated prices,they can afford to pay more of theirearnings out as dividends.

An example of such a companywould be Fortis Inc. Their payoutratio has ranged from 65 per centto 91 per cent, but the companyhas still managed to raise its divi-dend for over 44 years to date. Inmy opinion, this makes utilities anattractive stock purchase.

Avoid cyclical stocks

I mentioned avoiding cyclicalstocks earlier, now I’d like to ex-plain further. Cyclical stocks arethose affected by the ups anddowns in the overall economy,such as airlines, autos, technology,most energy, retail, consumer andmining. Dividends are real and rel-evant markers, meaning the com-pany either has the cash to pay thedividend or it does not. Reportedearnings, on the other hand, mayor may not be actual.

What should the dividendyield be when buying? I feel that a

high yield, above seven per centand higher, is too high. Thesestocks will either be speculative(offering a high yield to entice in-vestors), or stocks which may beexperiencing financial difficulty(the perception of the stock isnegative, driving down the price).However, there are still a coupleof choices to be made involvingyields below seven per cent.

Two possible scenarios to con-sider are the following: 1. A stockwith a low dividend yield of 1.5 percent and less, but with a fairly highdividend growth rate of around 10per cent to 12 per cent per year, or2. A stock with an average divi-dend yield of 2.5 per cent to fiveper cent with an average dividendgrowth rate of around five percent to eight per cent.

I recommend that there is aplace in one’s portfolio for both,but my preference would be tohold a majority of stocks with astarting dividend yield of be-tween 2.5 to five per cent. Aver-age-dividend yield stocks offerhigher income from the startthan low-yield stocks, and likelym o r e s u s t a i n a b l e d i v i d e n dgrowth over time. This is espe-cially true if the stock has a longhistory of growing the dividend ata reasonable rate, around five percent to eight per cent.

For example, a stock with aninitial dividend yield of four percent which grows its dividend fiveper cent per year would have ayield of 7.92 per cent after 15 years,which I feel is very reasonable. Lowinitial dividend yield around 0.62per cent and growth of 15 per centper year would result in a 4.4 percent dividend yield after 15 years.

Not a great yield after 15 years,but price growth may be higher.Stocks with a low yield and highdividend growth usually do offerhigher capital appreciation (theprice of their shares growing), pro-vided they can continue to main-tain their high dividend growthrate (usually over 10 per cent).

We can’t predict the futuregrowth rate of each stock, but wedo have support for our assump-tions every time they pay and raisetheir dividend. If the low-yield,high-growth company can main-tain its high growth rate, then thestock will offer a higher total re-turn than the average-yield stocksin the long run.

I feel comfortable with the hand-ful of steps I have provided and myexperience with this method overthe years.

The point I am trying to make isthat my strategy is about simplifi-cation, but again I must stress thatyour comfort level is the priority,feel free to research as many formsof analysis as you wish. I have nar-rowed a fairly large selection ofcompanies to a few key dividendgrowth stocks using yield and divi-dend growth as our key evaluationmeasurement.

I then applied even more testsfor further consideration. It isn’ta perfect test, but I do believe thatby following the process I’ve out-lined and by adding some com-mon sense for good measure, youshould feel comfortable withyour results.

Forget aboutshare price andkeep your eyes

on income instead Retired Edmonton certified management accountant and Investor’s Digest reader

Henry Mah reminds us that steady dividends keep paying even when markets are rough

180 / May 10, 2019 Issue 9 / 19

BUSINESS TRUSTSFinance

Brookfield Business Partners L.P. BBU.UN . .51.45 . . . .59.66-40.56 . .3405 . . . . .0.33 . . . . .0.33 . . . .0.33 . . . .0.69 . . . . .0.64 . . . .0.64 . .16.00Brookfield Infra. Partners L.P. .BIP.UN . . .55.13 . . . .57.06-44.04 . .15413 . . . .2.32 . . . . .2.51 . . . .2.68 . . . .4.34 . . . . .4.55 . . . .4.86 . .94.00

Industrial Products

Chemtrade Logistics I.F. . . . . .CHE.UN . . .9.19 . . . . .16.75-8.75 . . .851 . . . . .1.20 . . . . .1.20 . . . .1.20 . . . .7.78 . . . .13.06 . . .13.06 . . .0.00

Merchandising

A&W Revenue Royalties . . . . .AW.UN . . .39.96 . . . .39.98-30.26 . . .506 . . . . .1.60 . . . . .1.67 . . . .1.76 . . . .4.54 . . . . .4.19 . . . .4.40 . .90.30Boston Pizza Royalties I.F. . . .BPF.UN . .17.30 . . . .20.68-13.82 . . .379 . . . . .1.38 . . . . .1.38 . . . .1.39 . . . .6.30 . . . . .7.98 . . . .8.03 .103.30Boyd Group I.F. . . . . . . . . . . .BYD.UN .146.77 . . .153.06-102.59 .2916 . . . . .0.52 . . . . .0.53 . . . .0.54 . . . .0.51 . . . . .0.36 . . . .0.37 . .10.02

REAL ESTATE INVESTMENT TRUSTS (REITS)Real Estate

Allied Properties REIT . . . . . . .AP.UN . . .47.86 . . . .49.64-40.50 . .5221 . . . . .1.53 . . . . .1.56 . .160.00 . . . .3.64 . . . . .3.26 . .334.31 . .87.60American Hotel Income Prop. REIT * HOT.U . . . .5.19 . . . . .7.17-4.30 . . . .405 . . . . .0.65 . . . . .0.65 . . . .0.65 . . . .8.96 . . . .12.52 . . .12.49 . .99.70Artis REIT . . . . . . . . . . . . . . . .AX.UN . . . .10.53 . . . . .13.75-8.75 . . .1565 . . . . .1.08 . . . . .0.54 . . . .0.54 . . . .7.66 . . . . .5.13 . . . .5.13 .102.10Automotive Properties REIT . .APR.UN . .10.71 . . . . .11.47-8.45 . . .233 . . . . .0.80 . . . . .0.80 . . . .0.80 . . . .7.37 . . . . .7.47 . . . .7.47 . .88.50Boardwalk REIT . . . . . . . . . . .BEI.UN . . .38.91 . . . .52.43-36.47 . .1798 . . . . .2.15 . . . . .1.00 . . . .1.00 . . . .4.80 . . . . .2.57 . . . .2.57 . .45.40BSR REIT * . . . . . . . . . . . . . . .HOM.U . . . .9.67 . . . . .9.90-7.12 . . . .160 . . . . . .- . . . . . . . .0.50 . . . .0.52 . . . .- . . . . . . .5.17 . . . .5.38 . .78.50BTB REIT . . . . . . . . . . . . . . . .BTB.UN . . .4.81 . . . . .4.94-4.03 . . . .267 . . . . .0.43 . . . . .0.42 . . . .0.42 . . . .9.15 . . . . .8.73 . . . .8.73 .102.00Cdn Apt. Properties REIT . . . .CAR.UN . .47.84 . . . .52.10-36.86 . .7286 . . . . .1.27 . . . . .1.31 . . . .1.38 . . . .3.42 . . . . .2.74 . . . .2.88 . .65.70Cdn. Tire REIT . . . . . . . . . . . . .CRT.UN . .14.00 . . . .14.48-11.26 . .1357 . . . . .0.70 . . . . .0.73 . . . .0.76 . . . .4.84 . . . . .5.20 . . . .5.41 . .76.00Chartwell Retirement Residences CSH.UN . .14.75 . . . .15.70-13.42 . .3137 . . . . .0.55 . . . . .0.59 . . . .0.60 . . . .3.53 . . . . .3.99 . . . .4.07 . .65.11Choice Properties REIT . . . . .CHP.UN . .13.70 . . . .14.37-11.19 . .3807 . . . . .0.73 . . . . .0.74 . . . .0.76 . . . .5.47 . . . . .5.40 . . . .5.55 . .89.50Cominar REIT . . . . . . . . . . . . .CUF.UN . .11.35 . . . .12.95-10.41 . .2066 . . . . .1.33 . . . . .0.74 . . . .0.72 . . . .9.25 . . . . .6.52 . . . .6.34 . .87.80Crombie REIT . . . . . . . . . . . . .CRR.UN . .14.38 . . . .14.63-12.14 . .1289 . . . . .0.89 . . . . .0.89 . . . .0.89 . . . .6.45 . . . . .6.19 . . . .6.19 . .86.50Dream Hard Asset Alt. Trust . .DRA.UN . . .7.70 . . . . .7.79-5.90 . . . .556 . . . . .0.33 . . . . .0.37 . . . .0.40 . . . .4.78 . . . . .4.81 . . . .5.19 .111.10Dream Industrial REIT . . . . . . .DIR.UN . . .11.48 . . . . .12.09-9.25 . . .1225 . . . . .0.70 . . . . .0.70 . . . .0.70 . . . .6.70 . . . . .6.10 . . . .6.10 . .81.70Dream Office REIT . . . . . . . . .D.UN . . . . .23.17 . . . .26.01-21.56 . .1368 . . . . .1.25 . . . . .1.00 . . . .1.00 . . . .4.20 . . . . .4.32 . . . .4.32 . .32.00Dream Global Int'l REIT . . . . .DRG.UN . .13.80 . . . .15.43-11.58 . .2668 . . . . .0.80 . . . . .0.80 . . . .0.80 . . . .6.55 . . . . .5.80 . . . .5.80 . .27.80Granite REIT . . . . . . . . . . . . . .GRT.UN . .62.00 . . . .64.66-49.51 . .2832 . . . . .2.60 . . . . .2.72 . . . .2.80 . . . .5.30 . . . . .4.39 . . . .4.52 . .91.00H&R REIT . . . . . . . . . . . . . . . .HR.UN . . .22.70 . . . .23.66-18.94 . .6490 . . . . .1.38 . . . . .1.38 . . . .1.38 . . . .6.46 . . . . .6.08 . . . .6.08 . .79.40Inovalis REIT . . . . . . . . . . . . . .INO.UN . . .10.18 . . . . .10.60-9.12 . . .239 . . . . .0.82 . . . . .0.83 . . . .0.83 . . . .8.27 . . . . .8.15 . . . .8.15 . .95.70InterRent REIT . . . . . . . . . . . . .IIP.UN . . . .13.44 . . . . .14.79-9.93 . . .1428 . . . . .0.25 . . . . .0.27 . . . .0.29 . . . .2.72 . . . . .2.01 . . . .2.16 . .58.70

Invesque Inc.* . . . . . . . . . . . . .IVQ.U . . . . .7.10 . . . . .9.10-6.20 . . . .377 . . . . .0.74 . . . . .0.74 . . . .0.74 . . . .8.40 . . . .10.42 . . .10.42 . .86.00Killam Apartment REIT . . . . . .KMP.UN . .18.67 . . . .19.60-13.89 . .1706 . . . . .0.62 . . . . .0.64 . . . .0.66 . . . .3.60 . . . . .3.43 . . . .3.54 . .84.00Melcor REIT . . . . . . . . . . . . . .MR.UN . . . .7.81 . . . . .8.47-6.76 . . . .103 . . . . .0.68 . . . . .0.68 . . . .0.68 . . . .7.93 . . . . .8.71 . . . .8.71 . .99.00Minto Apartment REIT . . . . . .MI.UN . . . .19.05 . . . .20.58-15.45 . . .470 . . . . . .- . . . . . . . .0.20 . . . .0.41 . . . .- . . . . . . .1.05 . . . .2.15 . .56.25Morguard REIT . . . . . . . . . . . .MRT.UN . .12.35 . . . .13.61-10.46 . . .750 . . . . .0.96 . . . . .0.96 . . . .0.96 . . . .7.31 . . . . .7.77 . . . .7.77 . .83.50Morguard N.A. Res. REIT . . . .MRG.UN . .17.67 . . . .18.57-13.85 . . .596 . . . . .0.64 . . . . .0.66 . . . .0.68 . . . .4.28 . . . . .3.74 . . . .3.84 . .55.20Nexus REIT . . . . . . . . . . . . . .NXR.UN . . .2.02 . . . . .2.08-1.77 . . . .202 . . . . .0.16 . . . . .0.16 . . . .0.16 . . . .7.92 . . . . .7.92 . . . .7.92 . .83.30Northview Apartment REIT . . .NVU.UN . .27.82 . . . .29.51-23.93 . .1566 . . . . .1.63 . . . . .1.63 . . . .1.63 . . . .6.52 . . . . .5.86 . . . .5.86 . .93.30Northwest Healthcare Prop. REIT NWH.UN . .11.38 . . . . .11.84-9.27 . . .1334 . . . . .0.80 . . . . .0.80 . . . .0.80 . . . .7.05 . . . . .7.03 . . . .7.03 . .98.00Plaza Retail REIT . . . . . . . . . . .PLZ.UN . . . .4.13 . . . . .4.40-3.68 . . . .425 . . . . .0.27 . . . . .0.28 . . . .0.28 . . . .6.50 . . . . .6.78 . . . .6.78 . .95.70PRO REIT . . . . . . . . . . . . . . . .PRV.UN . . .2.30 . . . . .2.45-1.80 . . . .198 . . . . .0.21 . . . . .0.21 . . . .0.21 . . . .9.13 . . . . .9.13 . . . .9.13 .115.10Pure Multi-Family REIT L.P.* .RUF.U . . . . .6.52 . . . . .7.40-5.67 . . . .500 . . . . .0.38 . . . . .0.38 . . . .0.38 . . . .4.97 . . . . .5.83 . . . .5.83 .116.50Riocan REIT . . . . . . . . . . . . . .REI.UN . . .25.80 . . . .26.75-22.97 . .7859 . . . . .1.41 . . . . .1.44 . . . .1.44 . . . .5.79 . . . . .5.58 . . . .5.58 . .85.70Slate Office REIT . . . . . . . . . . .SOT.UN . . .5.83 . . . . .8.08-5.65 . . . .404 . . . . .0.75 . . . . .0.75 . . . .0.40 . . . .9.21 . . . .12.86 . . . .6.86 .116.90Slate Retail REIT . . . . . . . . . . .SRT.UN . .12.50 . . . .13.10-11.20 . . .528 . . . . .0.82 . . . . .0.85 . . . .0.85 . . . .6.26 . . . . .6.80 . . . .6.80 . .99.50SmartCentres REIT . . . . . . . . .SRU.UN . .33.90 . . . .35.23-28.14 . .4821 . . . . .1.71 . . . . .1.80 . . . .1.80 . . . .5.54 . . . . .5.31 . . . .5.31 . .83.30Summit Industrial Income REIT SMU.UN . .11.55 . . . . .12.28-8.27 . . .1113 . . . . .0.51 . . . . .0.57 . . . .0.52 . . . .6.97 . . . . .4.94 . . . .4.50 . .81.80True North Commercial REIT .TNT.UN . . .6.61 . . . . .6.90-5.30 . . . .380 . . . . .0.59 . . . . .0.59 . . . .0.59 . . . .8.85 . . . . .8.93 . . . .8.93 .104.00WPT Industrial REIT * . . . . . . .WIR.U . . . .13.66 . . . .14.69-12.10 . . .778 . . . . .0.76 . . . . .0.76 . . . .0.76 . . . .5.97 . . . . .5.56 . . . .5.56 . .91.10

RESOURCE TRUSTSOil & Gas - Producers

Crius Energy Trust . . . . . . . . .KWH.UN . . .8.66 . . . . .8.98-4.01 . . . .491 . . . . .0.81 . . . . .0.82 . . . .0.84 . . .11.45 . . . . .9.47 . . . .9.70 . .90.80

UTILITY TRUSTSUtilities

Brookfield Ren. Energy Partners L.P.* BEP.UN . .31.48 . . . .31.86-24.99 . .5630 . . . . .1.87 . . . . .1.96 . . . .2.06 . . . .5.48 . . . . .6.23 . . . .6.54 . .95.00

182 / May 10, 2019 Issue 9 / 19I N V E S T O R ’ S D I G E S T

INCOME TRUST INSIDER

Apr. 22 52 - wk Market Distributions $ Yield % 2017 PayoutIncome Trust Symbol Price $ Range $ Cap (m) $ 2017A 2018A 2019E 2017A 2018E 2019E Ratio %

Essential information on the most widely covered income trusts by leading analysts across Canada

Explanation of TermsMarket Capitalization is calculated by multiplying the current unit price by the number of units outstanding as of April 2019.Distribution is the amount of cash the income trust pays or is expected to pay annually. Yield is the annual distribution expressed asa percentage of the latest unit price. Payout ratio is the proportion of earnings paid out as dividends to shareholders.

*Distribution and unit price listed in U.S. dollars.

INCOME TRUST LAB

Essential information on the most widely covered income trusts by leading analysts across CanadaApr. 22 52 - wk Market Distributions $ Yield % 2017 Payout

Income Trust Symbol Price $ Range $ Cap (m) $ 2017A 2018A 2019E 2017A 2018E 2019E Ratio %

REITS

PROREITBigger and better things ahead

PROREIT (PRV.UN-TSX/VEN, $2.32) is acommercial properties investor with a lotgoing for it.

“In our view, PROREIT is a fast-growing,well diversified commercial REIT with anumber of attractive characteristics,” sayBMO Capital Markets analysts Jenny Maand Michael Hoang in a March 29, 2019research note. “We believe that the REIT hasthe team in place to continue its rapidgrowth into a larger diversified commercialREIT with a presence across Canada.”

They reiterate their “market perform”recommendation and their $2.25 target unitprice. The target, they explain, equates totheir net asset value (NAV) projection andimplies a six per cent forecasted total returnthat includes a yield of 9.1 per cent.

For the fourth quarter of 2018, PROREITreported funds from operations (FFO) perdiluted unit of $0.041, which was up 10 percent versus the year-earlier quarter. It wasalso in line with Ms. Ma and Mr. Hoang’sestimate of $0.039 and the consensusprojection of $0.041. Same property netoperating income (SP NOI), meanwhile, wasup 10.6 per cent year-over-year, whichmarked the second consecutive quarter ofinternal expansion.

“By segment, the strongest SP NOIgrowth was from retail, showing 9.8 per centgrowth year-over-year, and the industrialsegment showed 4.4 per cent growth year-over-year.”

“PROREIT has exercised the option tointernalize its asset management function,which became effective Apr. 1, 2019,” saythe analysts. “Mr. James Beckerleg,president and chief executive officer, andMr. Gordon Lawlor, chief financial officer,

will be employed directly by the REIT. “The terms of the REIT’s management

agreement stipulates that the fee toterminate the agreement is equal to onetimes management fees and expenses paidin the most recent fiscal year ($2.3 million or$0.024 per unit in 2018). We note that theinternalization fee is extremely unitholderfr iendly when compared to otherinternalization transactions observed in theCanadian REIT sector over the past numberof years,” Ms. Ma and Mr. Hoang conclude.

Summit Industrial Income REITInternalization deal announced

Summit Industrial Income REIT(SMU.UN-TSX, $11.85) has entered a deal tointernalize its asset and property manage-ment services, according to National BankFinancial analysts Matt Kornack and Hus-sam Maqbool in a March 26 research note.

“Summit has entered into an agreementwith its external manager (Sigma Asset Man-agement) to internalize its property and as-set management functions,” say the ana-lysts.”The Internalization agreement is ex-pected to cost $95 million ($20 million will bepaid in cash using the REIT’s credit facilitywhile $75 million will be satisfied via an eq-uity issuance of 6.7 million units at $11.25 perunit). The transaction is expected to close byMay 17, 2019 subject to unitholder approval.

“Internalization of the REIT’s externalmanagement structure is on the whole a pos-itive event, albeit we note that it doesn’tcome without a cost and while the amountbeing paid can be supported by historicalprecedents it is still a significant figure thatwould have accrued to shareholders underan internal structure. Management couldhave been internalized earlier without hav-ing a negative financial impact on the REITand ultimately equity investors financed thegrowth that led to a higher fee on internal-

ization,” according to the analysts.They add that the internalization is a bit

dilutive to National Bank’s net asset value(NAV) but neutral to funds from operations(FFO) per unit.

“We would recommend voting in favourof the internalization as it is fair in the con-text of the contractual terms of the agree-ment given the growth profile of the REITand the cost of internalization (as well as thefinancial impact of the ongoing fees) wouldbe greater in the future as SMU.UN contin-ues to increase in size,” say Messrs. Kornackand Maqbool.

They stick with their “sector perform”recommendation with a $11 target unit priceand a 19 times adjusted funds from opera-tions (AFFO) multiple.

Minto Apartment REIT2018 fourth-quarter performance strong

Minto Apartment REIT (MI.UN-TSX,$19.51) reported funds from operations(FFO) of $0.28 per unit for the fourth quar-ter of 2018.

But IA Securities analysts Brad Sturges,Carl Burton and Ian Ho say in a March 20,2019 research note that the property in-vestor’s FFO for the quarter, was actually$0.21 per unit after excluding $0.01 per unitin non-recurring gains connected to debt re-tirement. The tally was still a bit north of theanalysts’ estimate of $0.20 and PROREIT’sIPO forecast of $0.19 per unit.

“MI.UN remains well positioned to cap-ture above-average growth in net asset val-ue (NAV) per unit and adjusted FFO perunit from both internal and external growthavenues,” say Messrs. Sturges, Burton andHo. “The REIT also may benefit from itsstrong sponsorship from the Minto Groupof Companies that provides significant op-erating, acquisition and development ex-

pertise and an extensive network of indus-try relationships.

“While MI.UN has recently addedgreater operating scale in the Calgary rentalmarket through recent acquisitions, theREIT benefits from attractive exposure tostrong underlying apartment property fun-damentals in its largest markets of Ottawaand Toronto.”

As per the final quarter of last year, Mintosigned 250 new leases at average monthlyrent (AMR) increases of eight per cent com-pared to previous AMRs. The REIT projectsthat the weighted average in-place AMR of itsapartment rental units in Canada are still ap-proximately eight per cent south of estimat-ed market AMRs.

“MI.Un’s fourth quarter rental incomewas over 7.5 per cent above the REIT’s IPOforecast, reflecting over 250 basis pointsgreater-than-expected average occupancy of98.8 per cent on Dec. 31, 2018.

“MI.UN’s units trade at 22.1 times ourestimated 2019 FFO, approximately threeper cent above its estimated NAV of $18.75(using a 4.25 per cent annual cash net-op-erating-income cap rate), and yield 2.1 percent (based on estimated 2019 adjustedFFO payout ratio: approximately 56 percent),” say the analysts.

“In 2019, MI.UN does not have any prin-cipal debt maturities, while in 2020, approx-imately 12 million of the REIT’s debt maturesat a 3.59 per cent weighted average interesetrate. Notably about 85 per cent of the REIT’stotal principal maturities occur after 2022.

“MI.UN may have the capacity to gener-ate above-average organic cash flow growthover the next few years, partly reflecting theREIT’s below-market in-place AMRs.

“Our unchanged 12-month price target of$21 is equal to approximately 28.5 times ourestimated 2019 adjusted FFO of $0.74 perunit. We maintain our ‘buy’ rating.”

BlackBerry Ltd.BB-TSX, $13.47 ($11.82*); BB-NYSE, US$10.13 (US$8.97*)

BlackBerry announced an ac-quisition late last year thatpromised to strengthen its pres-ence in the cybersecurity space,said CIBC World Markets analystsTodd Coupland and Amy Dyck in aNov. 18, 2018 research note.

The company acquired Cy-lance, an artificial intelligence-based cybersecurity company forUS$1.4 billion. While the price was10.8 times fiscal 2018 revenue at atime when cyber rivals traded atabout nine times fiscal 2019, theanalysts said that the deal fit Black-Berry’s strategic goal of securingany end point.

Mr. Coupland and Ms. Dyckadded that the deal was expectedto be earnings per share (EPS) ac-cretive later in fiscal 2020. They up-graded their stock recommenda-tion to “outperform” and issued aUS$14 target share price then.

In a followup research note onMarch 29, 2019, Mr. Coupland andMs. Dyck say that BlackBerry re-ported better-than-expected re-sults for the fourth quarter of its2019 fiscal year (period ended Feb.28). They add, moreover, that thecompany’s guidance for fiscal2020 matches expectations.

BlackBerry’s revenue for thequarter was US$99 million while itsadjusted sales were US$257 mil-lion, compared to the analysts’ es-timate of US$232 million and theStreet’s estimate of US$51 million.Its adjusted EPS was US$0.11,compared to the analysts’ predic-tion of US$0.08.

“The outlook for fiscal 2020called for 23 per cent to 27 per centrevenue growth, or about $1.15 bil-lion in revenue at the mid-point,”say the analysts. “The outlook forEnterprise Solutions, Licensingand Cylance met our expectations.QNX operating system growthshould be approximately 16 percent, slightly lower than our priorforecast of 20 per cent.”

Mr. Coupland and Ms. Dyck re-iterate their “outperformer” rec-ommendation but lower their tar-get share price by a loonie to $13.

Superior Gold Inc.SGI-TSX/VEN, $0.79 ($0.87*)

PI Financial analyst Philip Ker’sNov. 28, 2018 research note focus-ing on Superior Gold, marked theresumption of coverage.

Assigning a “buy” recommen-dation and a target share price of$1.95, the analyst said he expectedto see a growing production profile(110,000 more ounces of gold in2019) as SGI targeted higher-gradeore zones and as managementaimed to fill its mill with the bestavailable grade of ore.

He added, however, that suc-cessful growth hinged on some cat-alysts. These include positive oper-ations and sustained cash flow;and positive exploration support-ing mine-life longevity.

Meanwhile, Superior’s resultsfor the fourth quarter of 2018 linedup with projections, say Mr. Kerand Akin Akinwale in a March 13,2019 research note.

They add that the company’soperations were adversely im-pacted in a number of ways dur-ing the final quarter of last yearand these factors led to an anemicquarter as well as a $4.6-millionnet cash burn.

The company reported earn-ings per share (EPS) of -$0.07 pershare or -$6.7 million, which was inline with the analysts’ estimate andthe consensus projection.

“Previously, Superior notedthat several factors impacted pro-duction during the quarter includ-ing: repairs to the crusher, equip-ment availability (mechanical andcontractor), and weather-relatedpower interruptions to the bore-fields,” say the analysts.

“All controllable factors havenow been rectified and manage-ment maintains its goal of deliver-ing and achieving maximum cashgeneration during 2019.

“Superior managed to mitigate

the bleeding reasonably well de-spite the weak quarter and endedthe year with $17.3 million in cashafter a net cash loss of $4.6 million.

“The current cash balanceleaves Superior in a solid positionto continue improving operationswhile maintaining its focus on ex-ploration to increase its resourceand reserve base.”

Messrs. Ker and Akinwale reit-erate their “buy” recommendationand $1.50 target share price.

Acreage Holdings Inc.ACRG.U-CSE, US$20.43 (US$20.50*)

The macroeconomic picture forU.S. cannabis operators “has nev-er been stronger” for businesseslike Acreage Holdings, said BeaconSecurities analysts Russell Stanleyand Susan Xu in a Nov. 20, 2018 re-search note that initiated coverageof the company.

They added that the companywas on track to exit 2018 with in-

terests in 18 states, giving it thebroadest footprint – in terms ofscale and reach – of any publicly-traded multi-state operator (MSO).

“While cannabis itself is still il-legal at the federal level in the Unit-ed States, we believe that contin-ued improvement in voter supportfor legalization, and PresidentDonald Trump’s April 2018 com-mitment to back congressional ef-forts to protect states that have le-galized cannabis, will continue tode-risk cannabis companies withan operational focus on the UnitedStates,” they say.

Mr. Stanley and Ms. Xu kickedthings off with a “buy” recom-mendation and a US$40 targetshare price.

In an April 2, 2019 researchnote, Mr. Stanley and Ms. Xu saythat Acreage’s buildout is buildingspeed - and they refer to its newopenings in March as evidence.

“Acreage announced that two

The Botanist-branded dispensariesopened in March in New York andNorth Dakota,” say the analysts.The New York dispensary is locat-ed on Long Island in Farmingdale,and is the company’s fourth loca-tion in the state (the maximum al-lowed by current regulations). TheFargo location is the first opera-tional dispensary in North Dakota.

“With the addition of these lo-cations, Acreage now owns or hasmanagement services agreementsin place (including pending acqui-sitions) for 25 open dispensariesacross 12 states – including nine ofwhich are The Botanist-branded.We view these openings positivelyas they reflect the continued build-out of the retail network, which weexpect to translate into strong rev-enue and earnings improvement.”

The analysts stick with their“buy” recommendation andUS$40 target share price.

THREE-MONTH FOLLOWUP

How November research has faredUpdated recommendations from our Jan. 4, 2019 edition

184 / May 10, 2019 WHAT THE BROKERS SAY ABOUT CANADIAN STOCKS Issue 9 / 19

I N V E S T O R ’ S D I G E S T

VersaPay Corp.VPY-TSX/VEN, $1.45 ($2.19*)

When PI Financial analystDavid Kwan covered VersaPay inan April 13, 2018 report, he said thatthe company’s revenue growthcontinued to accelerate.

Its total revenue grew 126 percent year-over year and 36 per centquarter-over-quarter to $1.1 mil-lion in its fourth fiscal quarter of2017. The tally exceeded Mr.Kwan’s earlier estimate of$900,000 and the consensus esti-mate of $1 million.

Revenue from VersaPay ARC, acloud-based accounts receivableautomation platform, remainedsolid, climbing 72 per cent year-over-year and 24 per cent quarter-over-quarter.

The analyst, who said he re-mained bullish on the stock andexpected revenue growth to con-tinue to accelerate, reiterated his“buy” recommendation, $3.50 tar-get share price and “speculative”risk rating.

In an April 4, 2019 researchnote, Mr. Kwan and Neehal Upad-hyaya say VersaPay reported strongresults for the fourth quarter 2018,which suggests that growth is onthe verge of re-accelerating.

The company’s revenues wereup 37 per cent year-over-year and28 per cent quarter-over-quarter to$1.5 million, which was north ofthe analysts’ projection and theconsensus estimate of $1.3 million

“In addition to record revenue,VersaPay achieved its strongestsingle sales quarter with approxi-mately $1.5 million in new ARC an-nual recurring revenue (ARR), driv-en by strong contribution from theelectronic channel, particularlyRoyal Bank of Canada,” say Messrs.Kwan and Upadhyaya.

“Meanwhile total ARC ARR hit$3.3 million (up 86 per cent year-over-year and 30 per cent quarter-over-quarter) while total ARR was$5.3 million (up 55 per cent year-over-year and 19 per cent quarter-over-quarter.

“The ARR backlog jumped 46per cent quarter-over-quarter to arecord $1.8 million, which whencombined with the aforemen-tioned strong revenue metrics, in-dicates that growth is poised to re-accelerate going forward.”

The company’s adjusted EBIT-DA was in line with projections,adjusting for about $1.2 millionworth of one-time expenses, saythe analysts.

They reiterate their “buy” rec-ommendation, $2.30 target shareprice and “speculative” risk rating.

Axis Auto Finance Inc.AXIS-TSX/VEN, $0.48 ($0.70*)

Axis Auto Finance’s move to ac-quire Trend Financial Corp. for$29.3 million was the topic up fordiscussion in an April 3, 2018 re-search note by PI Financial analystBob Gibson.

According to the analyst, thedeal equated to 1.9 times the priceto book ratio. Trend’s owners re-ceived $20.9 million in cash, $5.4million in equity and $3 million inconvertible debentures.

Mr. Gibson increased his targetshare price to $1.70 from $1.40,and reiterated his “buy” recom-mendation.

Fast-forwarding about a yearlater, Mr. Gibson says in a March26, 2019 research note that Axis re-cently announced the closing of itsnew $100 million senior securedrevolving debt facility.

“The credit facility has a four-year term,” says the analyst.”It re-

places the existing senior debt fa-cility priced at prime rate plus 7.5per cent. Management noted the525-basis point reduction in bor-rowing costs would result in over$5 million in interest cost savingsannually on a fully drawn facility.Presently, that facility is $30 mil-lion, so we estimate it will add $2.4million in savings in fiscal 2020.

“Management is very prudentwhen providing loans, so wewould not expect an overnight in-crease in receivables and thereforedebt, as evidenced by the fact thelegacy facility was only three-quar-ters drawn.”

Mr. Gibson says that PI Finan-cial had been expecting the com-pany to make an announcementabout a new bank line for quite awhile. The development, he adds,is of the game-changer varietysince interest costs will decreaseand the extra leverage will permitreceivables to ramp up.

“Fiscal 2020, (period endingJune 2020) should be a year of dra-matic growth,” says the analyst.“With all the new hires, the bankline was the last remaining piece.”

The analyst reiterates his “buy”recommendation and “above aver-age” risk rating. He also boosts histarget share price by a dime to$1.35 per share.

Park Lawn Corp.PLC-TSX, $25.53 ($24.69*)

While Park Lawn’s results forthe last quarter of 2017 were mixedcompared to consensus estimates,Acumen Capital analyst Brian Powsaid the long-term outlook for theowner and operator of cemeteries,crematoriums and funeral homesremained positive.

He added that Park Lawn wascapable of driving margins up and

boosting operational improvementin 2018 with the integration of re-cent acquisitions.

Mr. Pow reiterated his “buy”recommendation and boosted his12-month target share price to$29.50 from $29.

In a March 27, 2019 researchnote, Mr. Pow and Nick Corcorancover Park Lawn’s results for the fi-nal quarter of 2018. On the whole,the company’s performance was inline with their projections.

“Total revenue was $50.6 mil-lion versus $25.9 million for 2017’sfourth quarter, up 95.2 per centyear-over-year. Management esti-mates fourth-quarter 2018 revenuefrom comparable business unitswas up 10.8 per cent year-over-year. Year-over-year changes weredriven by an increase in pre-needsales, revenue associated with var-ious aspects of the cemetery busi-ness and higher revenue from low-er contributions to trust funds.

“Management noted that therewas a large bulk cemetery propertysale in Lafayette, N.Y. which con-tributed approximately five percent of the quarterly growth.”

The company’s adjusted earn-ings before interest, taxes depreci-ation and amortization (EBITDA)for the quarter was $11.3 millioncompared to $5.6 million a yearago, and its adjusted earnings pershare (EPS) was $0.21 compared to$0.183 for the year-ago period.

“The fourth-quarter 2018 re-sults were in line with expecta-tions,” say Messrs. Pow and Corco-ran. “We maintain our ‘buy’ ratingand with a revised target price of$29 (from $28). Risks to our outlookinclude the timing of at-need ser-vices and the ability to drive accre-tion from recent acquisitions.”

ANNUAL FOLLOWUP

What was said 12 months agoUpdated recommendations from our May 11, 2018 edition

* Price one year ago

* Price three months ago

Issue 9 / 19 I N V E S T O R ’ S D I G E S T May 10, 2019 / 185

VIEWS OF LEADINGCANADIAN ANALYSTSVIEWS OF LEADING

CANADIAN ANALYSTS

TrulieveCannabisBEACON SECURITIESGrowing faster than mosthad anticipated

Digested from a April 11 report by analyst Russell Stanley

Mr. Stanley says TrulieveCannabis Corp. (TRUL-CSE, $19.30)is growing quicker than he (andTRUL’s management guidance) hadanticipated. In fact, the Florida-based marijuana company reportedbetter-than-expected fourth-quar-ter 2018 revenue and earnings, lead-ing Mr. Stanley to boost his esti-mates for 2020 (but leaving 2019 es-timates unchanged).

The bump in his earnings fore-cast results in the analyst’s targetprice rising to $32 per share from$28. The company also has plans toopen up more dispensaries in Flori-da than he had previously forecast.

Florida is the third-most popu-lated state in the U.S. where man-agement estimates to have 60-to-70 per cent market share .

Furthermore, Trulieve is ex-panding into California and Mas-sachusetts via acquisitions, thus in-creasing its geographic and marketrange. So Mr. Stanley leaves his“buy” recommendation as it is.

“Driven by an increase in ourfiscal 2020 earnings before interest,taxes, depreciation and amortiza-tion (EBITDA) estimate fromUS$124 million to US$142 million,in turn driven by upward revisionsto our revenue drivers, the compa-ny reported better-than-expectedfourth-quarter revenue/EBITDA,and reiterated its 2019 guidance forrevenue of US$214 million and ad-justed EBITDA of US$92 million.

“However, we stress that man-agement’s current guidance doesnot reflect the additional 14 dis-pensaries TRUL can open under arecently announced settlement,nor the recent legalization ofsmokable cannabis products,which should significantly increasethe addressable market and sup-port an upward revision to our rev-enue/dispensary assumptions,”the analyst states.

As an investment thesis, Mr.Stanley claims U.S. operators tradeat significant discounts to Canadi-an peers, despite improving feder-al environment down south. Headds that the first half of 2019should be catalyst rich, with the le-galization of smokable productslikely to drive patient growth.

Trulieve is now trading at 12times his 2020 EBITDA estimate.This represents a 37 per cent dis-count to the 20-time average forthe broad peer group, and a 67 percent discount to the 37-time aver-age for companies with over $1 bil-lion in market capitalization.

As for Trulieve’s push into Mas-sachusetts and California, Mr. Stan-ley reports that the TRUL acquiredLife Essence for $4.4 million in cashduring Dec. 2018. Life Essence hasstate-approvals required to developa cultivation/processing operation,

and three dispensaries in Mas-sachusetts. During the month pri-or, TRUL acquired 80 per cent ofLeef Industries for $4 million. Ac-cording to Mr. Stanley, this addedan operating adult-use dispensarylicense in Palm Springs, Calif.

Regarding the number of dis-pensaries opened, the analyststates, “We previously assumedthat Trulieve would exit 2019 with35 dispensaries operating, and2020 with 40 dispensaries open.We have increased those assump-tions to 36 and 45, respectively. Webelieve there is more upside tothese estimates, given that thecompany’s license now allows it toopen up to 49 dispensaries.”

Trulieve Cannabis is the firstand largest fully-licensed cannabiscompany in the State of Florida.

Gibson Energy RAYMOND JAMES FINANCIALStoryline playing out asexpected

Digested from an April 3 report by analyst Chris Cox

Investor day for Gibson EnergyInc. (GEI-TSX, $23.43) showed thatthe company’s underlying story isstill playing out as expected.

Mr. Cox says that RaymondJames’ thesis on the company,which operates a diverse portfolioof assets in many North Americanbasins, is still more or less thesame post-investor day. He addsthat he left feeling confident in thecompany’s financial strength andits ability to deliver strong pershare growth.

“In particular, the U.S. strategyreally seems to be gaining promi-nence; while this remains some-what of a ‘show me’ aspect to thestory, the potential upside if Gib-son can replicate its terminal suc-cess south of the border could be acompelling source of upside forthe shares longer-term,” says Mr.Cox, who sticks with his “outper-form” recommendation butboosts his 12-month target shareprice to $25 from $23.

“Offsetting our fundamentalenthusiasm for the story, we be-lieve near-term upside could becapped with the stock outperform-ing peers by 5.4 per cent year-to-date, despite the significant con-traction in heavy oil differentials.”

The analyst says that Gibsonannounced a deal to divest itsCanadian truck transportationbusiness for $100 million during itsinvestor day. Now that the compa-ny’s asset sale strategy haswrapped up and with the solid sup-port of its marketing segment lastyear, DBRS issued a BBB (low) rat-ing for Gibson.

“In addition to an improvedcost of capital, the new ratingshould allow Gibson to lengthenthe tenor of its debt maturities toreflect the duration of its contractsin the terminals business, as well asopening up the preferred market asan alternative source of capital,”says Mr. Cox.

“A key topic of this year’s in-vestor day was the increased atten-tion of the U.S. strategy, with guid-ance of $50 million-$100 millionper annum of capital deployment(versus $25 million-$50 millionpreviously). While we believe theU.S. strategy remains a ‘show me’component of the story, the guid-ing vision appears to be centeredon replicating some version of theHardisty business model at theWink hub.”

Gibson Energy is a Calgary-based midstream oilfield servicecompany in the oil and gas industry.

RootsCIBC WORLD MARKETS Stable quarter but ques-tions remain

Digested from an April 3 by analyst Matt Bank

Roots Corp. (ROOT-TSX, $4.20)returned to comparable salesgrowth, but the broader backdropmakes it difficult to get overly ex-cited. Analyst Matt Banks says thecompany still has work to do aftera malaise in brand resonance, andneeds to demonstrate its ability torelease relevant, seasonally-robustproduct through a full year, allwhile navigating a macro environ-ment at risk of turning. He remainsat the low end of guidance ranges,although his share price targetmoves to $5 (from $4.50 formerly),and his rating stays “neutral”.

The financial results are as fol-lows, “Comparable sales growth ofthree per cent with positive grossmargin percentages is a welcome,stable fourth quarter for Roots in atough market, though staying pos-itive will be a quarterly challenge.Store traffic was negative in thefourth quarter and has stayed so inthe first quarter of 2019, with no in-dications of this trend improving.We are optimistic that price/mix,conversion, and online growth canovercome negative retail traffic,but consistent product and brandexecution is somewhat unproven.We are forecasting 3.6 per cent2019 comparable sales growth (af-ter a 1.3 per cent decline in 2018).

“Roots closed more stores inCanada than it opened in 2018.While it is positive that the compa-ny is willing to close underper-forming stores, square footagegrowth will be less of a boost tosales, and the optimal store countin Canada remains a question.

“Roots is guiding towards sell-ing, general and administrativegrowing slightly slower than salesin 2019, overcoming higher ad-vertising expenses (target is fourper cent of sales). For the first halfof the year gross margins will bechallenged as the company clearsout seasonal inventory and shiftsto its new distribution centre. Forthe year we expect modestly bet-ter margins, driving 10 per centEBITDA (earnings before interest,taxes, depreciation and amortiza-tion) growth.

Every issue of Investor’s Digest contains upwardsof 50 digested research reports from Canada’stop analysts. The reports listed below can be

found on pages 184 to 193.

COMPANIES IN THIS ISSUE

3MCredit Suisse . . . . . . . . . .OutperformAcreage HoldingsBeacon Securities . . . . . . . . . . . . .BuyAkuminPI Financial . . . . . . . . . . . . . . . . . .BuyAscendant ResourcesBeacon Securities . . . . . . . . . . . . .BuyAutoCanadaAltaCorp Capital . . . . . . . . . .NeutralAxis Auto FinancePI Financial . . . . . . . . . . . . . . . . . .BuyBarrick GoldDeutsche Bank . . . . . . . . . . . . . . .BuyBlackBerryCIBC World Markets . . .OutperformBrookfield Asset ManagementPreference Shares Series 26Purpose Investments . . . . . . . . . .BuyBRPDesjardins Capital Markets . . . .BuyCalian GroupAcumen Capital . . . . . . . . . . . . . .BuyCentric HealthBeacon Securities . . . . . . . . . . . . .BuyCogeco CommunicationsCIBC World Markets . . .OutperformConifex TimberCIBC World Markets . . . . . . .NeutralCorus EntertainmentBMO Capital Markets . . . . . . . . . . .Market performCresco LabsPI Financial . . . . . . . . . . . . . . . . . .BuyDelta 9 CannabisMackie Research . . . . . . . . . . . . . .BuyDowCredit Suisse . . . . . . . . . .OutperformEncanaAltaCorp Capital . . . . . .OutperformFortress Global EnterprisesRaymond James Financial . . . . . . . . . . . . .OutperformGibson EnergyRaymond James Financial . . . . . . . . . . . . .OutperformGoodfood MarketAcumen Capital . . . . . . . . . . . . . .BuyHEXOAltaCorp Capital . . . . . .OutperformJaguar MiningPI Financial . . . . . . . . . . . . . . . . . .BuyLargo ResourcesCIBC World Markets . . .Outperform

Lightspeed POSCIBC World Markets . . .OutperformMediPharm LabsMackie Research . . . . . . . . . . . . . .BuyMosaicCIBC World Markets . . . . . . .NeutralNEO LithiumBeacon Securities . . . . . . . . . . . . .BuyNeo Performance MaterialsRaymond James Financial . . . . . . . . . . . . .OutperformNikeGoldman Sachs . . . . . . . . . . .NeutralOnexOdlum Brown . . . . . . . . . . . . . . . .BuyPark LawnAcumen Capital . . . . . . . . . . . . . .BuyPFBAcumen Capital . . . . . . . . . . . . . .BuyRootsCIBC World Markets . . . . . . .NeutralRoxgoldRaymond James Financial . . . . . . . . . . . . .OutperformSNC-Lavalin GroupAltaCorp Capital . . . . . .OutperformStornoway DiamondBMO Capital Markets . . . . . . . . . . . .UnderperformSuperior GoldPI Financial . . . . . . . . . . . . . . . . . .BuyTerra Firma CapitalAcumen Capital . . . . . . . . . . . . . .BuyTeslaGoldman Sachs . . . . . . . . . . . . . . .SellTheratechnologiesMackie Research . . . . . . . . . . . . .HoldTransCanada Corp. PreferredShares Series 9Purpose Investments . . . . . . . . . .BuyTrulieve CannabisBeacon Securities . . . . . . . . . . . . .BuyVersaPayPI Financial . . . . . . . . . . . . . . . . . .BuyVillage Farms InternationalBeacon Securities . . . . . . . . . . . . .BuyWajaxRaymond James Financial . . . . . . . . . .Market performWalt DisneyGoldman Sachs . . . . . . . . . . . . . . .BuyWingstopBMO Capital Markets . .Outperform

Continued on next page

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I N V E S T O R ’ S D I G E S T

“2018 was a volatile year wherethe company saw some slippage inits brand momentum and productassortment as it had many initia-tives on the go. After the 2018 re-set, the company is back on a pathfor double-digit growth, but limit-ed visibility on company initiatives.

“We continue to use six timesenterprise value-to-EBITDA tovalue Roots, in the range of slow-er-growth apparel peers givenRoots’ difficult 2018 and limitedvisibility on 2019.

“Guidance has been cut andgrowth has been pushed out.Though there are multiple driversof potential upside, we balancethese against a challenging andrapidly changing industry, andconclude that risks and reward areappropriately priced in today’s val-uation. We see limited upside untilthere is better visibility on growthmaterializing.”

Roots is a Canadian lifestylebrand that sells direct-to-consumerthrough 117 stores in North Ameri-ca and through 139 partner-oper-ated stores in Asia.

AutoCanadaALTACORP CAPITALU.S. auto sector weighingdown expectations

Digested from a March 18 reportby analyst Chris Murray

The performance of the U.S.auto sector is weighing down onmarket expectations for Auto-Canada Inc. (ACQ-TSX, $11.74)forcing management to reduce itsearnings expectations, Mr. Murrayclaims. While the company mayachieve its goals in Canada, a lessfavourable cost structure in theU.S. business is proving to be adrag on operations, according tomanagement.

The analyst keeps his “neutral”recommendation as is. But buoyedby management’s recent initiativesto control growth and grow rev-enues, he bumps his target priceup by 50 cents to $18 per share,

Mr. Murray comments, “Over-all, while we continue to see im-provement in Canadian operationsdriven by the ‘Go Forward’ plan(which focuses on retailing usedcars over new), the cost structure ofthe U.S. business is weighing onour forecasts.

“Although the U.S. auto envi-ronment remains uncertain (espe-cially for new cars because manycustomers cannot afford financingat the higher federal interest rates),management sees an approximate$10-million loss in 2018 in the U.S.and is looking to drive that to $0 bythe end of 2019. ACQ is imple-menting its plan to create opera-tional efficiencies and grow rev-enues, with a particular focus oncreating a sustainable platformwith U.S. assets that can weather achallenging economic climate.

“Material profit share is expect-ed from AutoCanada’s new offer-ings in finance and insurance forused vehicles at its dealerships. Thecompany also recently created anew special finance division, whichwill arrange loans for customerswho cannot qualify for traditionalloans offered by banks and affili-ates of vehicle manufacturers. It in-cludes a new wholesale division,with which ACQ expects to capital-ize on arbitrage opportunities inthe sale of used vehicles betweendifferent geographies.”

Overall, AutoCanada’s fourth-quarter 2018 results were mixedcompared to analyst estimates,showing consolidated revenue, ad-justed earnings before interest, tax,depreciation and amortization(EBITDA) and adjusted fully-dilut-ed earnings per share (EPS) of$782.8 million (up 6.8 per centyear-over-year), $22.6 million and-$0.34, as compared to analyst ex-pectations for $776.1 million, $25.1million and $0.40, respectively.ACQ also declared a quarterly divi-dend of $0.10 per common sharepayable on March 15.

“Our 2019 and 2020 adjustedEBITDA estimates revise to $100.2million and $111.6 million as com-pared to $103.3 million and $110.9million, previously (after manage-ment hedged its own $100-millionor greater EBITDA forecasts). Cor-respondingly, our estimates for

2019 and 2020 adjusted fully-dilut-ed EPS revise to $1.63 and $2.01from $1.71 and $2.04 previously.

“Management noted that itsnear-term focus will be on thecompany’s Go Forward Plan andthat there are no plans for mergersor acquisitions until later in 2019.They cite a renewed interest in pur-chasing collision repair shops inaddition to traditional dealerships.Management also expects to dis-pose of non-core real estate assetssometime during the first half of2019,” Mr. Murray concludes.

AutoCanada operates car deal-erships in Canada. The companyoffers new and used vehicles, spareparts, maintenance services, andcustomer financing.

RoxgoldRAYMOND JAMES FINANCIALCompany wraps 2018 onhigh note – and tune couldbe even better this yearDigested from a March 27 reportby analyst Tara Hassan

Roxgold Inc. (ROXG-TSX, $0.90)wrapped up 2018 on a high note,according to Ms. Hassan.

In fact, the analyst says Ray-mond James updated its model toreflect the junior gold producer’sperformance in 2018, which was inline with their projections.

“With Roxgold forecasting in-creased production in 2019 withthe completion of Bagassi South,we expect free cash flow to in-crease materially,” she says. “Wereiterate our view that Roxgold’scurrent valuation does not accu-rately reflect its superior free cashflow profile relative to its juniorproducing peers.”

The company, whose flagshipholding is its 90 per cent-ownedYaramoko project in Burkina Faso,reported adjusted earnings pershare (EPS) last year of US$0.10versus the analyst’s estimate ofUS$0.09. Its adjusted cash flow pershare (CFPS) was US$0.24. Thiswas in line with Ms. Hassan’s esti-mate of US$0.24 and north of the

consensus estimate of US$0.19.“Roxgold’s 2018 production of

133,000 ounces at all-in-sustain-ing-costs (AISC) of US$740 ounce,topped the company’s increasedguidance of 120,000 to 130,000ounces (up from original guidanceof 110,000 to 120,000 ounces) atAISC of US$740 to US$790 perounce,” says the analyst, who addsthat production numbers shouldrise this year.

“While processed grade de-clined in 2018, the company re-duced per tonne costs by 12 percent. Fourth quarter 2018 produc-tion of 26,000 ounces was pre-re-leased and in-line with our esti-mate. Record throughput toppedour expectations and offset lowerthan expected head grade. Fourthquarter 2018 AISC of US$836 perounce was just above our estimateof US$815 per ounce.”

As far as the company’s finan-cial health is concerned, Ms. Has-san says that Roxgold’s balancesheet not only is solid, but also isset to get even better. The compa-ny, in fact, concluded last year withUS$59.8 million in balance sheetcash and US$24.2 million in long-term debt, which is down 13 percent quarter-over-quarter.

“Subsequent to quarter end,Roxgold announced it completedthe purchase of 4.9 million sharesfor cancelation under its previous-ly announced NCIB program,” saysthe analyst. “We expect Roxgold tocontinue to improve its balancesheet during 2019 as free cash flowincreases over 2018.”

Ms. Hassan reiterates her “out-perform” recommendation and$2.15 target share price.

Roxgold is a Canadian-basedgold mining company with assetslocated in West Africa.

Jaguar Mining PI FINANCIALCompany announces results for fourth quarterof 2018Digested from a March 28 reportby analyst Philip Ker

Jaguar Mining Inc. (JAG-TSX,$0.15) reported a production missfor the final quarter of last year onthe heels of a pre-release sayingpretty much the same thing.

Mr. Ker, who reiterates his“buy” recommendation and his$0.40 12-month target share price,says PI Financial continues to waitfor things to get better at the com-pany’s Turmalina operations.

The company announced a netloss of -$15.1 million, or -$0.05 pershare, for the final quarter of 2018compared to the analyst’s estimateof a net loss of $600,000, or $0.00per share.

“Consolidated cash costs of$795 per ounce for the fourth quar-ter of 2018 were pre-released whileannual cash costs of $732 per ouncewere a 12.5 per cent improvementyear-over-year,” says Mr. Ker. “Thiswas led by Pilar where cash costsdeclined 34 per cent year-over-yearto $702 per ounce.

“Reported AISC (all-in sustain-ing costs) for the fourth quarter of2018 and fiscal 2018 not previouslyreported were: $1,279 per ounce,and $1,244 per ounce compared toour estimate of $1,118 per ounceand $1,193 per ounce, respectively.Increased sustaining capital ex-

penditure continues to be relatedto development efforts to achieve afull turnaround at Turmalina.”

The company wrapped up 2018with $6.3 million in cash versus$6.7 million at the previous quarterconclusion.

“Considering the recent bridgefacility completed in first quarterof 2019, we continue to be wary ofthe capital layouts at Turmalinaand gradual increase in produc-tion and cash flow,” says the ana-lyst. “At year-end, Jaguar had anegative working capital positionof $2.4 million.

“No annual guidance has beenprovided by Jaguar at this time.Our outlook projects consolidatedgold production of 87,600 ouncesat cash costs of $710 per ounce andAISC of $1,150 per ounce for 2019.

“Our $0.40 per share target isgenerated using a 0.6 times NAVPSmultiple ($1,300 per ounce gold atfive per cent on under a DCF anal-ysis of Jaguar’s operations.”

Jaguar Mining is a Canadian-listed junior gold mining, develop-ment, and exploration companyoperating in Brazil.

NEO LithiumBEACON SECURITIES Company’s wholly-ownedbrine project in Argentinaon right trackDigested from an April 1 report by analyst Ahmad Shaath

NEO Lithium Corp. (NLC-TSX/VEN, $0.86) is advancing whatpromises to be the next majorbrine project.

Mr. Shaath says that Beacon re-cently attended a two-day visit tosee the site of the company’s 3Qproject in Catamarca, Argentina.

“We visited NLC’s newly com-menced pilot plant in Fiambalá,which is currently testing the entireflowsheet from a four per cent brinefeed concentrated at 3Q’s pilotponds,” says the analyst. “The plantwill be producing lithium carbon-ate samples from the 3Q deposit inapproximately two months’ time.

“We view this as a critical turn-ing point for the project as it willfirstly give the company samplesto prove the project’s credentialsas a viable source of battery-gradelithium carbonate on its efforts tosecure strategic partners. This inturn will increase confidence inmanagement’s technical creden-tials, and help the team further en-hance their understanding of theprocess flow sheet.”

The analyst says that Beaconwas duly impressed with what thetechnical team has achieved as faras the development level at the 3QSalar as well as how knowledgeablethey were about the reserves andthe resources.

“The company’s work includesanalysis of optimal well locations,sizes, production rates and the var-ious evaporation conditions (rain,snow, wind, solar radiation) acrossdifferent seasons,” says Mr. Shaath.“We believe NLC’s technical team,led by CEO Mr. Waldo Perez, hasthe right technical expertise toprogress the 3Q project and realizeits economic value. The next cata-lyst from this front should be re-sults from the recently-completed20-day pump test.”

NEO recognizes that communi-ty engagement is important, says

Continued from preceding page

Keith Richards speaks about Technical Analysis and the Current Market Outlook

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Issue 9 / 19 WHAT THE BROKERS SAY ABOUT CANADIAN STOCKS May 10, 2019 / 187

I N V E S T O R ’ S D I G E S T

the analyst, who adds the compa-ny is taking care of the locals. Dur-ing the pilot plant tour, a govern-ment official discussed the impor-tance of the project to the provinceas well as to future employmentoptions in nearby towns.

The analyst sticks with his“buy” recommendation and $2.20target share price.

NEO Lithium has become aprominent new name in lithiumbrine exploration by virtue of its 3Qproject and experienced team.

GoodfoodMarketACUMEN CAPITALOpportunity abounds inearly-stage growth businessDigested from an April 4 report byanalyst Jim Byrne

Goodfood Market Corp.’s(FOOD-TSX, $3.72) strategy hasbeen to invest in incentives andmarketing

in order to drive subscribergrowth at the expense of profitabil-ity in the near term. The compa-ny’s subscriber count at the end ofthe second quarter of fiscal 2019were 159,000, up from 126,000

at the end of first quarter of fis-cal 2019. In addition, Mr. Byrnemaintains that investments in au-tomation this year will pay off overtime with higher margins and low-er labour costs in the future. Theanalyst continues to give the stocka “buy” recommendation and$4.80 target share price.

With regards to financial report-ing, the analysts say, “Reported netrevenue of $36.6 M compared withour estimate of $37.9 million andconsensus of $38.3 million. Rev-enue growth was very strong, upapproximately 133 per cent year-over-year and approximately 24 percent quarter-over-quarter.

“Gross profit margins in thesecond quarter of fiscal 2019 were20.9 per cent, slightly below our es-timate of 23 per cent and analysts’consensus of 23.2 per cent. Adjust-ed gross margins, adding backcredits, and incentives, were 37.8per cent, in-line with our estimateof 37.9 per cent.

“Goodfood reported an adjust-ed EBITDA loss of $5.5 million,compared with our estimate for aloss of $4.5 million. EBITDA mar-gins were impacted by someweather impacts in the quarter thatincreased costs.

“Management indicated thatautomation in their Montreal facil-ity has reached 50 per cent. The ex-pansion in Montreal is ahead ofschedule and under budget withcompletion expected before theend of the third quarter of fiscal2019 (May). Capital expenditureswere $2.8 million in the secondquarter. The company will expandtheir Calgary facility to increasesales capacity to $200 million, upfrom current levels of $100 million.Automation investments have be-gun in Calgary.

“One of the most attractive as-pects of Goodfood’s business mod-el is the built-in negative workingcapital. Subscribers pay the com-pany up front for a delivery that ar-rives a few days later. The compa-ny does not pay their suppliers forabout 10 days to 90 days, which al-

lows the company to utilize thatworking capital for investments inadding new subscribers.

“In the second quarter of fiscal2019 the company used $400,000from cash flow from operations.For the last four quarters the com-pany has generated about $4.2 mil-lion in cash flow from operations.Given the anticipated weakness inthe fourth quarter of fiscal 2019 weforecast slightly negative operatingcash flows for the fiscal year.

“We anticipate moderategrowth of subscribers and net rev-enue in third quarter of fiscal 2019.For the fourth quarter we antici-pate subscribers will remain rela-tively flat while net revenues willdrop slightly given the lower orderrate in the summer time.

“Goodfood offers investors anopportunity at a relatively attrac-tive valuation.”

Goodfood Market is the leadinghome meal solutions company inCanada. The company delivers in-gredients to its subscribers weekly toprepare meals at home. The Com-pany has its main production andhead offices in Montreal with a sec-ond production facility in Calgary.It began operations in 2014 in Que-bec as Culiniste and began tradingon the TSX in June 2017.

Delta 9CannabisMACKIE RESEARCHGrow Pod technology offerslow costs to pot growers

Digested from a April 4 report by analysts Greg McLeish and Nicola McFadden

The analysts initiate coverage ofDelta 9 Cannabis Inc. (NINE-TSX/VEN, $1.56) with a “buy” rec-ommendation and $4 per-sharetarget price, saying its growingmethods provides low-cost stableproduction.

Delta 9’s proprietary productionmethodology involves the use of amodular, scalable, and stackableproduction unit called a Grow Pod.Grow Pod technology is a propri-etary system developed with scala-bility and cost efficiency in mind.The systems are modular for ease ofassembly, and stackable up to threeunits high, allowing for more effi-cient use of available floor space. Insome cases, Grow Pods can morethan double production capacity.

The company currently oper-ates an 85,000 square-foot produc-tion facility in Winnipeg, Manitobathat is capable of producing morethan 4,000 kilograms of cannabisper year. Through the balance of2019 the company plans to addmore than more than 450 growpods and this will increase annualproduction capacity to over 16,000kilograms per year.

Each pod costs $25,000 toretrofit and is capable of producingover 32 kilograms dried cannabisper year. First cultivation is expect-ed by management in the thirdquarter of 2019 and full-opera-tional capacity is projected for thefirst quarter of 2020. The total costof Phase 2 is approximately $25.5million and will likely be completeby the end of 2019.

As for its retail history, it is quiteshort. Delta 9 was also one of fourlegal producers to be awarded li-censes to operate retail cannabis

stores in Manitoba. On Oct. 17,2018 the company opened up itsfirst retail store. During the firstweek following legalization, Delta 9reported almost 9,600 transactionsand $736,124 in revenue at this re-tail location.

On March 21, the company an-nounced the opening of a secondretail location in the Osborne Vil-lage area of Winnipeg; a denselypopulated area that sees significantdaily foot traffic and over 50,000 ve-hicles per day.

Additionally, on April 2, thecompany announced the grandopening of its 4,500 square-footDelta 9 Cannabis Superstore inBrandon. Through the balance of2019 the company will be openone additional retail store inThompson. Once these stores arefully operational, the analysts be-lieve that they will generate rev-enue of approximately $30 millionor more per year.

Furthermore, management be-lieves that international expansionis fundamental to its long-termgrowth and in March 2018, thecompany signed a letter of intentwith German pharmacy compa-nies CanPharma GMBH and Glob-al Group Kalapa S.L. for the exportof medical cannabis.

Established in 2012, Delta 9Cannabis is one of Canada’s onlyvertically integrated cannabis com-panies with licensed production,processing, distribution and retailoperations.

Conifex TimberCIBC WORLD MARKETSDawn of an all-Americanlumber producer

Digested from a March 29 reportby analysts Hamir Patel and Roshni Luthra

The analysts question whetheror not Conifex Timber Inc. (CFF-TSX, $1.55) will source all its lum-ber south of the border. They sayits earnings from its legacy Canadi-an operations will be challenged inthe near term, adding that its prof-itability is going to be constrainedthroughout 2019 as its U.S. millsare still in the midst of ramping up.

Shipments of Conifex-pro-duced products from the U.S. grew25 per cent, thus offsetting an 11per cent reduction in shipmentsfrom mills in British Columbia.Plus, with lumber markets overallremaining challenged, Mr. Pateland Ms. Luthra maintain their“neutral” recommendation onConifex. They also reduce theirprice target to $1.75 per share from$2 due to their significantly lowerearnings forecast for 2019 along-side a bleak downside scenario.

Earnings from its legacy Cana-dian operations will be challengedby elevated log costs and weakWestern Spruce-Pine-Fir prices,the analysts state. The latter is cur-rently US$350 per thousand boardfeet (mfbm) or only US$290 permfbm after 20 per cent tariffs.

“With fiber scarcity leading tounsustainable operating losses formany smaller operators in BritishColumbia, we suspect Conifex’sAnnual Allowable Cut (is the annu-al amount of timber that can beharvested on a sustainable basiswithin a defined forest area) in the

Analysts follow as many as 20 stocks, most of which are rated“buys”. Of those buys, an analyst has one or two special favouritesseen as most suitable for new buying. This column is devoted to thoseone or two favourite “best buys”.

Contrary to their name and unlike other parts of the market,which have raced to new highs since correcting last year,Canadian preferred shares remain unjustly neglected, ar-gues portfolio manager Sandy Liang. “It’s kind of perverse.

Some of the highest-quality shares from the highest-quality issuerswere hit the hardest,” he says, citing Royal Bank of Canada andToronto-Dominion Bank as examples.

Mr. Liang is head of fixed income at Purpose Investments, as wellas a portfolio manager and a chartered financial analyst (CFA).Starting out in the financial industry in 1991, he has specialized infixed-income investments since the mid-’90s.

To illustrate the scale of the decline since September, Mr. Liangnotes that the S&P/TSX Preferred Share Index, which he stresses isbased on share prices rather than returns, was steady throughout2018, ranging between 700 and 720 points. As of September 2018’send, it stood at about 710 points. “When the market volatilityhit…the index went straight down for the fourth quarter,” says theportfolio manager. “Right now it’s sitting at about 630,” which hasnot been the case since mid-2016, he told Investor’s Digest in anApril 22 interview. “This year-to-date, it hasn’t done much.”

A Purpose report prepared by Mr. Liang and fellow analyst Jere-my Lin notes, “As a result of the sell-off in...an investor can gener-ate a pre-tax equivalent income stream of six per cent to eight percent from the most credit-worthy corporations in Canada.”

Blue chips such as Manulife Financial Corp. and the majorCanadian banks were “hit pretty disproportionately” in the sell-off,Mr. Liang says. The portfolio manager attributes the beating theyhave taken to the influence of passive, index-based ETFs. Given thehighest-quality companies (based on market capitalization) havethe highest weighting on the preferred share index, when it beganto drop, passive fund managers indiscriminately sold those sharesto match the index, leading to a vicious cycle, he argues. “The wholemarket is about $80 billion, which is not that big,” the analyst notes.

On a long-term basis, he says the outlook for preferred shares ishealthy because of the high likelihood of interest rates rising. Cen-tral banks have backed away from the quantitative easing that droveup bond prices before the shift to a bond bear market in mid-2016.While many still adhere to negative interest rate policies, again todrive up bonds, those rates are unsustainable in the long run andmake bond prices unrealistic, he asserts. “The fixed-income bubblehas gotten out of hand.” Even if interest rates do not improve in theshort term, preferred shares will continue to pay out coupons (pe-riodic interest payments on the principal investment) like clock-work, says Mr. Liang. “The instances where high-quality companiesmiss interest payments are almost non-existent. There are no bet-ter companies in this country than the ones that issue prefs.”

Buying preferred shares is also more appealing than buyingbonds because most preferred shares are “rate-reset”, meaning therate paid out on coupons changes periodically in line with Canadi-an government bond yields. Thus, their investors can benefit fromhigher rates and inflation, Mr. Liang explains.

The analyst names the Brookfield Asset Management Inc. Pref-erence Shares Series 26 (BAM.PR.T-TSX, $16.58) and TransCana-da Corp. Preferred Shares Series 9 (TRP.PR.E-TSX, $16.82) as his“best buy” recommendations.

“It’s one of our top picks among the issuers,” he says of Brook-field. “Brookfield is bar-none one of the strongest credit profiles inCanada.” The Series 26 shares’ par value is $25 each and it has aninternal rate of return of 6.0 per cent, translating to a taxable equiv-alent of 7.8 per cent. “This is a preferred share that trades at a deepdiscount to par,” says the analyst.

At present, the company has only about $10 billion in preferredshares and debt on a market capitalization of more than $60 billion.“There’s a lot of value cushion in these preferreds but on top of that,Brookfield has been creating shareholder value for decades,” Mr.Liang says. In addition to direct asset management (namely real es-tate, renewable power, infrastructure, and private equity), Brook-field owns asset managers and makes fees from them, incurring rel-atively little cost to themselves.

TransCanada’s Series 9 shares offer an internal rate of return of6.1 per cent, translating to a taxable equivalent of 7.9 per cent.

“The pipeline business is actually very favourable right now be-cause the return on pipeline investments is very strong,” says Mr.Liang. Low oil prices in Canada have forced producers to pump itto other markets, raising pipeline demand.

TransCanada’s market capitalization is also around $60 billion.Mr. Liang admits that it has slightly more debt than Brookfield, butadds that most of its business is regulated and under long-term con-tracts, so earnings are not volatile.

‘Best Buys’ fromleading analysts

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188 / May 10, 2019 WHAT THE BROKERS SAY ABOUT CANADIAN STOCKS Issue 9 / 19

province would have greater valueto larger producers in the compa-ny’s operating regions with lowermanufacturing costs. Extractingvalue from its legacy Canadian op-erations would allow the companyto accelerate high-return capitalprojects across its three-mill plat-form in the U.S. South,” Mr. Pateland Ms. Luthra say.

Conifex Timber is a North Amer-ican lumber producer with fivesawmills. The company also pro-duces renewable power.

NeoPerformanceMaterialsRAYMOND JAMES FINANCIALNeo shares deal deadDigested from a March 12 reportby analyst Frederic Bastien

Mr. Bastien asserts that theStreet overreacted to the termina-tion of Neo Performance MaterialsInc.’s (NEO-TSX, $10.16) acquisi-tion agreement with Luxfer Hold-ings PLC, as well as its disappoint-ing fourth-quarter 2018 results. Mr.Bastien plunges his target price to$15 per share from $19.25 to ac-knowledge its poor performance oflate, but keeps his “outperform”recommendation.

NEO and Luxfer agreed to cancelthe previously announced transac-tion under which Luxfer would haveacquired NEO for US$612 million incash and stock. No specific reasonsfor the split-up were given, but sincethe deal had received the blessing ofboth board of directors and NEO’smajority shareholder, Oaktree Cap-ital, the analyst was left to speculateon why it ran into a sea of regulato-ry red tape.

“Overall, we acknowledge thatthe macro backdrop for NEO hasweakened in recent months, andthat the stock may remain underpressure until it rotates from arbi-trage funds back into the hands offundamental investors, but our jobis to call out asymmetric return op-portunities when we see them,”says Mr. Bastien.

The March 11 one-day 37 percent price plunge (versus the over-all TSX rising one per cent) has no-tably pushed NEO’s valuation to3.5 times forward operating profits,versus an average of 7.8 times for agroup of advanced material andchemical firms.

“That’s overly punitive (thestock price fall), in our view, for afirm that continuously drives prod-uct innovation, generates healthyand growing free cash flow, andmakes the electrification of theUS$2 trillion auto industry possi-ble. Accordingly we encourage pa-tient, value investors to buy NEOtoday,” Mr. Bastien adds.

The analyst goes on to com-ment about the poor fourth-quar-ter results. “Adjusted operatingprofits of US$13 million for thequarter compared unfavourably toboth our target and the consensusforecast of US$17 million. Of thenegative variance to our forecast,US$3 million was attributable toMagnequench (magnetic-pow-ders) division. The segment notonly suffered more than expectedfrom the slowing Chinese econo-

my and global auto sector, but alsoexperienced declining rare earthprices and lagging pass-throughpricing agreements.”

Neo Performance Materials is aleading global manufacturer offunctional materials derived fromrare earth elements.

HEXOALTACORP CAPITALCannabis revolution in-cludes branding, bever-ages and moreDigested from a April 4 report by analyst David Kideckel

Mr. Kideckel adds HEXO Corp.(HEXO-TSX, $8.76) to his coverageuniverse because he likes its focuson strategic partnerships. This in-cludes partnerships for distribu-tion and specialized products suchas cannabis-infused beveragesmade in collaboration with thebeer giant Molson Coors Canada.

Add in brick-and-mortar salesas legalization hits full swing, andhe expects revenues to really blos-som by more than fifteen-foldyear-over-year. The analyst givesan initial recommendation of “out-perform” with a 12-month targetprice of $10.50 per share.

“The company’s trend-settingpartnership with Molson Coors isa major step in HEXO’s quest to-wards enhanced market leader-ship... HEXO sees opportunitiesfor major additional partnershipsacross various industries (e.g.pharmaceuticals, tobacco andbeverages).

“However, unlike the cannabissector, these are mature industrieswith well-established players, andas a result, the barriers to entry aresignificantly high in comparison.By pursuing partnership opportu-nities with leaders in these respec-tive industries to develop productsderived from cannabis supplied byHEXO, the company effectivelypenetrates multi-billion dollarmarkets, creating a top cannabi-noid-derived product with the‘Powered by HEXO’ brand,” Mr.Kideckel states.

He adds that HEXO has devel-oped award-winning products andcontinues to focus on developinginnovative products in anticipationof the cannabis derivative marketthat management expects to comeonline later this year. The companyhas also invested in their 579,000square foot Belleville, Quebec facil-ity which will provide the companyand their future Fortune 500 part-ners with a fully licensed, state-of-the-art facility to conduct productresearch and development.

HEXO also has strong retaildistribution across Canada, andhas secured the single largest for-ward-supply contract among theCanadian licensed producers withQuebec’s Société québécoise ducannabis (SQDC). Add in the re-cent acquisition of NewstrikeBrands Ltd., the company willhave established distributionagreements in nine provinces.With this acquisition, HEXO willadd 470,000 square feet in pro-duction space when completed,additional public and private re-tail channels, and a branding rela-tionship with members of TheTragically Hip - one of Canada’smost revered musical acts.

HEXO generated $13.4 millionin net revenue for the second quar-ter of fiscal 2019 (period endingJan. 2019), which management ex-pects to stay relatively flat in thefollowing quarter. For the fourthfiscal quarter, the analyst providesa substantial lift in his net-rev-enues forecast, growing to $29.4million, which reflects the contri-bution from the Newstrike acquisi-tion, coupled with a significant in-crease in supply as the new 1-mil-lion square-feet facility known asB9 scales up.

He also anticipates some rev-enue uplift for the Canadiancannabis sector as a whole asbrick-and-mortar retailers comeonline in Ontario. He estimatesthat the company will generate$62.6 million in net revenue for fis-cal 2019, up from gross sales of $4.9million in 2018.

HEXO creates and distributes in-novative, easy-to-use and easy-to-understand products to serve theCanadian cannabis market.

Continued from preceding page

ACUMEN CAPITAL

While Terra Firma Capital Corp. (TII-TSX/VEN, $0.55) still facesheadwinds, the long-term outlook for the real estate financier re-mains positive to analysts Nick Corcoran and Brian Pow. Thoseheadwinds were ever-present in its fourth-quarter 2018 results,which showed capital deployment of only $7 million – much softerthan the $34 million they expected. They have revised their gross cap-ital deployment estimate for 2019 downward to $60 million.

Even though one of their few positive takeaways from the quarterwas greater-than-expected foreign exchange gains from U.S. opera-tions, the analysts say Terra Firma continues to build long-termshareholder value by growing its book value. They note the compa-ny also repurchased about three million shares in the quarter (about58 million shares are outstanding as of mid-April).

The analysts keep their “speculative buy” recommendation forthe company. They say the next catalyst for its share price will be therelease of its first-quarter 2019 results in May. Meanwhile, they re-duce their target price by a dime to $0.70 per share.

ODLUM BROWN

Onex Corp. (ONEX-TSX, $76.12) will purchase investment man-ager Gluskin Sheff + Associates Inc. for $445 million, or $14.25 pershare. Gluskin Sheff closed at $11.17 per share on March 22, shortlybefore the companies announced the takeover.

Gluskin manages roughly $8.2 billion, 89 per cent of which is onbehalf of high net worth clients. The firm has struggled in recent years– since the beginning of 2017, net outflows have totalled aboutUS$750 million. Accordingly, the acquisition hurts Onex’s revenuemix, but analyst Benjamin Sinclair lays out several reasons to sup-port the deal. Firstly, Onex paid a reasonable price, he says. Second-ly, it will pay for Gluskin with cash on hand, so the transaction willimmediately add to earnings and cash flow. Thirdly, Onex andGluskin together can offer more of a one-stop-shop solution to in-stitutional investors. Finally, there is little chance of integration hic-cups because Gluskin will stay largely independent after the merger.

Mr. Sinclair recommends investors “buy” Onex and reiterates a$100 per-share target price.

ACUMEN CAPITAL

Calian Group Ltd. (CGY-TSX, $32.76) has taken over German-based satellite communications company, SatService GmbH as ofApril 1 for 6.5 million euros (or $9.7 million) in cash, plus a potential$5-million earnout on the table. Analysts Brian Pow and Nick Cor-coran applaud the acquisition, Calian’s first international takeover.

SatService annual revenues are about $10 million with a marginprofile that’s stronger than Calian’s Systems Engineering Divisionsegment, according to Calian. SatService has grown around 15 percent annually with some variability from year to year, the analystsnote. Its primary markets are Germany, Switzerland and Austria, withsecondary markets in the United Kingdom and France.

The SatService business has a smaller backlog than Calian, name-ly around six months’ visibility on orders, and revenue is more vari-able. On the bright side, 80 per cent of SatService’s customers are newto Calian, providing opportunities for cross-selling.

Arguing that SatService creates a platform for future growth in Eu-ropean markets, the analysts maintain their “buy” stance and raisetheir target share price for Calian to $37.50 from $36.

BEACON SECURITIES

Village Farms International Inc. (VFF-TSX, $19.36) could doubleyour returns since it is doubling the capacity of its marijuana-grow-ing joint venture, analysts Doug Cooper and Susan Xu argue. Theyincrease their target price to $60 per share from $32 and reiterate thatinvestors should “buy” the stock.

In late March, Village Farms announced that its 50 per cent-owned joint venture, Pure Sunfarms, had exercised its option on theexisting 1.1-million-square-foot Delta 2 greenhouse facility in Delta,B.C., which Village Farms owns, doubling Pure’s footprint to 2.2 mil-lion square feet. “We believe this catapults Pure to top-3 status interms of scale of all of the Canadian licensed producers in domesticcapacity...and could ultimately have 30 per cent to 40 per cent mar-ket share in Canada,” say Mr. Cooper and Ms. Xu. “In terms of totalproduction, our recent site visit confirmed that Pure is currently ona 50,000-kilogram to 55,000-kilogram run-rate (up to 75,000 kilo-grams in the third quarter of 2019) making it one of, if not the largestCanadian licensed producers right now,” the analysts exclaim.

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I N V E S T O R ’ S D I G E S T

CorusEntertainmentBMO CAPITAL MARKETSTelevision advertising re-bounds in second fiscalquarter, but will it last?Digested from an April 5 report by analyst Tim Casey

While many might think the tra-ditional television advertising plat-form is withering away, Corus En-tertainment Inc. (CJR.B-TSX,$6.44) reported a second consecu-tive quarter of growth in televisionadvertising. Furthermore, Mr.Casey predicts this growth willcontinue into the third quarter offiscal 2019, albeit at a more sub-dued rate versus the 11 per cent itposted in the second quarter of fis-cal 2019. The key question Mr.Casey poses for investors iswhether this is sustainable. As hecontinues to be cautious and seeslonger-term growth challenges forthe company, Mr. Casey gives thestock a “market perform” ratingand $7 target share price.

Mr. Casey further highlightsstructural headwinds such as cord-cutting/shaving, online platformsgaining share of advertising bud-gets, and Hollywood launching di-rect-to-consumers streaming ser-vices. That being said he notes thatthe dividend cut in fiscal 2019 anddisciplined debt repayments pro-vide margin and free cash flow sup-port and reduce balance sheet risk.

With regards to financial re-porting the analyst notes,”Corus’second-quarter fiscal 2019 results(period ended Feb. 28) were aboveexpectations. Television advertis-ing revenues (a key metric) was thebright spot in the quarter (11 percent growth versus a loss of threeper cent last year). Managementattributes the outperformance toroughly a third from a weak complast year (Winter Olympics), anoth-er third from pricing, and the re-mainder from advertisers recali-brating media mix budgets (i.e.,digital versus television).

“Looking ahead, managementexpects TV advertising growth toremain positive in the third quarterof fiscal 2019, but visibility beyondthat remains limited. Subscriberrevenues, and merchandising, dis-tribution and other revenues wereboth down on a year-over-year ba-sis. Radio remains soft.

“Consolidated revenue in-creased four per cent to $384 mil-lion (consensus of $374 million),and adjusted EBITDA (earnings be-fore interest, taxes, depreciationand amortization) was flat at $113million (consensus $109 million).

“Adjusted EPS were $0.07 versus$0.05 consensus and $0.20 last year.All in, reported free cash flow was$84 million versus $82 million lastyear. Television revenue was up fiveper cent to $353 million (consensus$341 million) and adjusted EBITDAgrew 10 per cent to $114 million(consensus $108 million).

“As a reminder, with third-quar-ter fiscal 2018 results, Corus an-nounced the dividend will be cut 79per cent to $0.24 per share annual-ized in fiscal 2019 (to be paid quar-terly instead of monthly), which im-plies annualized cash savings of ap-proximately $187 million that couldhelp de-lever the balance sheet (thechanges imply about 0.35-times innet debt to EBITDA per year, absent

a recession) and/or fund organicgrowth initiatives.

“We forecast relatively flatEBITDA growth through fiscal2020. The EPS profile reflects high-er (non-cash) depreciation andamortization charges for televisionlicenses going forward as theamortization period has been resetfrom an indefinite period to be-tween three and twenty years.”

Corus Entertainment is thelargest non-vertically integratedtelevision broadcaster in Canada.Corus owns a portfolio of radio sta-tions across most of the country, in-cluding station clusters in Toronto,Ottawa, and several major westernmarkets. Corus’ entertainmentbrands include kids, family, andwomen’s brands such as YTV, Tree-house, and W Network.

AscendantResources BEACON SECURITIESCoverage initiated Digested from an April 2 report byanalyst Jacob Willoughby

Mr. Willoughby initiates cover-age of Ascendant Resources Inc.(ASND-TSX, $0.52) with a “buy”recommendation and a targetshare price of $1.80.

The analyst says that the com-pany has boosted production at itswholly owned El Mochito mine lo-cated in Honduras and is present-ly concentrating on profitably ex-panding production and slashingexpenses.

He adds that the possible ex-pansion at the project has a pre-liminary economic assessment(PEA) demonstrating a 58 per centinternal rate of return (IRR) thatmay be accomplished without re-sorting to equity dilution.

“Ascendant is a well-managed,base metals producer with 2018output of roughly 63 million poundsof zinc, 22 million pounds of leadalong with 1 million ounces of Ag(or roughly 91 million pounds ofzinc equivalent),” says the analyst.“The company expects 2019 pro-duction of approximately 70 millionpounds of zinc, 23 million poundsof lead and one million ounces ofsilver (roughly 100 million poundsof zinc equivalent). This increasedproduction will further lower theunit cost of production.

“Later this year, we expect thecompanywill close on a projectdebt package of $35 million tofund an expansion at El Mochitothat should allow it to produceover 90 million pounds of zinc, 22million pounds of lead and740,000 ounces of silver annuallyat a capital expenditure of $32.8million for at least 10 years after atwo-year construction and com-missioning period.

“We have not yet made theseassumptions in our model, but willonce a formal announcement ismade to proceed with the project.The expansion would add roughly$55 million in net present value toour NAV, or approximately $0.55per share to our target price. Addi-tionally, the company is earninginto an 80 per cent interest in thehighly prospective Lagoa Salgadazinc-copper-lead-silver deposit insouthern Portugal that could be-come its second mine.”

Ascendant Resources is aToronto-based mining company

that owns and operates the zinc-lead-silver El Mochito Mine inHonduras.

Barrick GoldDEUTSCHE BANKFavourable catalysts couldshine on gold behemoth

Digested from a April 9 report by analyst Chris Terry

Based on a more favourablegold pricing outlook on the hori-zon, as well as synergies from its re-cent mergers, along with strategicdivestments in hand, Mr. Terry up-grades his view on Barrick GoldCorp. (ABX-TSX, $17.29; GOLD-NYSE, US$12.97) from “hold” to“buy”, and raises his target shareprice from US$12.75 to US$15. Headds that he has a preference forBarrick amongst the large-cap pre-cious equities miners.

“Since our last update, Barrickhas also announced the Nevadajoint venture with Newmont Min-ing Corp. (in February). Our newgold price forecast is an improve-ment to US$1,350 per ounce in thefourth quarter of this year with anaverage price of US$1,319 perounce in 2019 and US$1,375 perounce in 2020 - both up seven percent from our previous estimates,”the analyst says.

He notes that year-to-date, goldis up slightly at about two per centto land at approximately US$1,308per ounce, as of the date of his re-port. He claims it has shown signs ofmoving higher with a mid-Februaryprice reaching US$1,341 per ounce.

Regarding synergies and divest-ments, Mr. Terry states that sincethe merger with Randgold Re-sources Ltd. in early January, Bar-rick management has now hadsome time to focus on integratingall assets while reviewing opportu-nities to divest non-core assets -one of which could be LagunasNorte in South America where ithas incurred losses due to opera-tional problems.

The company is also puttingfurther energy into cost reductions,optimizing existing assets and towork with Newmont on the recent-ly announced joint venture inNevada, which should close by midyear. In early March, Barrick andNewmont agreed to form a jointventure to combine their assets ingold-rich Nevada. Barrick will own61.5 per cent and be the sole oper-ator, and will also control threeseats of the board of directors (on apro-rata basis), while Newmontwill own 38.5 per cent and will havetwo seats.

Estimates for synergies havebeen announced by managementat about US$4.7 billion at a net pre-sent value over the next 20 years,which in theory would imply anapproximate US$2.9 billion and aUS $1.65 per share uplift for Bar-rick. Newmont could benefit byUS$2.90 per share, according toMr. Terry.

The analyst also believes furtherupside could come from Barrick’scopper business, which he sug-gests is likely under appreciatedwith copper now moving up closeto US$3 per pound (from US$2.63at the turn of the year).

Barrick Gold is one of the world’slargest gold producers.

Continued on next page

CIBC WORLD MARKETS

Following fiscal 2019 second-quarter (period ended February2019) revenue, operating profits and subscription numbers that beattheir forecasts at Cogeco Communications Inc. (CCA-TSX, $91.57),analysts Robert Bek and Kulveer Grewal predict the cable company’srecent recovery momentum will continue.

Underpinned by solid subscription momentum for its phone, In-ternet and cable television packages (particularly in Canada) – earn-ings before interest, taxes, depreciation and amortization (EBITDA)of $280.6 million for the quarter were 3.4 per cent ahead of the ana-lysts’ $271.2-million forecast, buoyed by much better-than-expect-ed margins at its Canadian cable division (at 53.5 per cent comparedto the analysts’ forecast of 51.6 per cent).

Cogeco reiterated its fiscal 2019 (period ending August 2019) year-over-year growth guidance of six per cent to eight per cent for rev-enue and eight per cent to 10 per cent for EBITDA, while increasingits free cash flow guidance on the back of lower capital expenses. Theanalysts boost their target price to $98 per share from $94 and keeptheir “outperformer” recommendation.

MACKIE RESEARCH

Theratechnologies Inc. (TH-TSX, $8.74) could not remedy poorsales, leading to fiscal 2019 first-quarter (period ended February2019) revenue and earnings that missed Mackie Research’s mark. An-alysts André Uddin and Yue Toby Ma have reduced their U.S. salesestimate for Trogarzo, an entry inhibitor HIV medication from thecompany, in turn prompting a lower target price for Theratechnolo-gies, $9.25 compared to $9.65 previously.

In the quarter, Trogarzo’s U.S. sales were US$6.1 million, signifi-cantly weaker than the analysts’ estimate of US$13.3 million. A slow-er-than-expected drug launch “would be very difficult to be turnedaround,” they add. In response, for the second time this year, theylower their U.S. sales estimates of Trogarzo between fiscal 2019 andfiscal 2023 and reduce their U.S. peak sales outlook from US$248 mil-lion to US$180 million.

Revenues in the first quarter totalled US$15.1 million, much low-er than the analysts’ estimate of US$21.7 million. A net income lossper share of -US$0.02 also missed their expectation of US$0.02 ashare in earnings. The analysts keep their “hold” recommendation.

BMO CAPITAL MARKETS

Stornoway Diamond Corp. (SWY-TSX, $0.10) delivered relative-ly weak production sales, and revenue due to weather-related plantissues, and poor (albeit rising) diamond prices during the first quar-ter of 2019, analysts Edward Sterck and Kodees Waran say.

Stornoway reported first-quarter production of 445,000 carats,eight per cent less than the BMO forecast of 482,000 carats. The an-alysts say throughput was six per cent less than they predicted, whilean average grade of 76 carats per hundred tonnes of ore was two percent lower. However, with operations now running at or above ca-pacity levels, Stornoway plans to catch up on production during theremainder of 2019, the analysts say. They keep their “underperform”recommendation but offer no target price.

The company reported quarterly gross revenue of $47 million,falling short of the analysts’ forecast by 15 per cent. The realized di-amond price of US$83 per carat in the first quarter missed their fore-cast by four per cent, although it was eight per cent higher than thefourth-quarter 2018 price - and within the company’s 2019 guidancerange of US$80 per carat to US$105 a carat.

ALTACORP CAPITAL

SNC-Lavalin Group Inc. (SNC-TSX, $34) will sell a 10.01 per centinterest in the Highway 407 Express Toll Route concession to the On-tario Municipal Employees Retirement System (OMERS), one ofCanada’s largest defined benefit pension plans with $97 billion in as-sets. It will receive gross proceeds of up to $3.25 billion, $3 billion tobe paid on closing, and retain a 6.76 per cent interest in the highway.

Analysts Chris Murray and Marko Tesanovic say the cash will pro-tect SNC’s credit rating and give it a chance to create shareholder val-ue by buying back shares. They estimate the transaction will net thecompany about $27 per SNC share on a 100 per cent basis assuminga tax rate of 13.3 per cent (the Quebec provincial capital gains rate).

This was above their last published estimate of $25.24 per sharereinforcing the value contained in the Highway 407 asset, they note.

Messrs. Murray and Tesanovic reiterate that SNC will ‘outper-form’ peers and raise their target share price for it to $50 from $48.

Briefly Noted

190 / May 10, 2019 WHAT THE BROKERS SAY ABOUT CANADIAN STOCKS Issue 9 / 19

I N V E S T O R ’ S D I G E S T

Akumin PI FINANCIALStrong growth trajectorymakes year-over-yearcomparisons unnecessaryDigested from a March 29 reportby analyst Robert Gibson

A k u m i n I n c . ( A K U - T S X ,US$3.28) reported revenue ofUS$45.45 million, adjusted earningsbefore interest, taxes, depreciationand amortization (EBITDA) ofUS$9.2 million and net income at-tributable to shareholders of US$2.2million, or US$0.05 per share, forthe fourth quarter of 2018.

The analyst, who reiterates his“buy” recommendation andUS$7.50 target share price, saysthat the company’s substantialgrowth renders year-over-yearcomparisons unimportant. Thatsaid, the revenue, EBITDA and netincome totals were south of theconsensus estimates of US$47 mil-lion for sales, US$11.3 million foradjusted EBITDA and US$0.07 foradjusted EPS.

“As a measure of growth,management is reporting the vol-ume of procedures performed inits diagnostic imaging centersbased on relative value units(RVUs),” says Mr. Gibson. “Aku-min volume was 1,020,000 RVUsin the quarter versus 850,000RVUs in the third quarter of 2018,a 20 per cent increase. They not-ed that some of this growth wasbecause the operations were bro-ken when acquired, so were com-ing off a low base.

“However, excluding acquisi-tions made in 2018, revenue fell 3.4per cent, due to the lower contri-bution from the Texas operationsafter Akumin acquired the non-controlling interest. We are lower-ing our projected revenue per cen-ter in Texas and in Florida.”

“EBITDA margin fell to 20.2per cent from 21.2 per cent. Witha full quarter of the Rose acquisi-tion, employee compensationjumped 30.8 per cent or 42.4 per

cent of sales, versus 37.7 per centlast quarter. Management notedthat Rose employees their own ra-diologists. Management is work-ing to integrate the operations ofthe Rose and Broward County ac-quisitions.”

PI Financial updates its esti-mates for 2019 with revenue ex-pected to come in at US$200.9 mil-lion – compared to US$224.9 mil-lion previously – adjusted EBITDAto come in at US$49.7 million –compared to US$56.7 million –2020 revenue expected to come inat US$243.4 million and 2020 ad-justed EBITDA expected to come inat US$62.4 million.

Akumin is a leading provider offreestanding, fixed-site outpatientdiagnostic imaging services in theU.S.

Lightspeed POSCIBC WORLD MARKETSLet there be lightDigested from an April 2 report by analysts Todd Coupland and Amy Dyck

Founded in 2005, LightspeedPOS Inc. (LSPD-TSX, $21.38) has acompetitive, cloud-based, point-of-sale (POS) software system forsmall to medium-sized (SMB) re-tailers or restauranteurs. On aver-age, SMBs on Lightspeed’s POSadd 20 per cent, or approximately$100,000 in annual sales. Recently,the company added fully integrat-ed payments to its offering. To-gether, according to Mr. Couplandand Ms. Dyck, POS and Paymentsstrengthen Lightspeed’s platformand position it for strong financialresults over our forecast period.The analysts initiate coverage ofthe company with an “outper-former” recommendation and $26target share price.

As per the analysts given thatpresently the SMB market for POSinnovation is large with a low cloudadoption rate. The total availablemarket for Lightspeed’s POS sys-tem is 47 million SMBs. Lightspeedhas only 47,000 customer locationstoday. The analysts further high-light that, “Less than 20 per cent of

the 47 million SMBs in the retailand restaurant industries have mi-grated to a cloud-based POS soft-ware system. The benefits and fi-nancial returns reaped by access tothe easy-to-use technology at acompelling price are encouragingmarket adoption.

“Competitive market reviewsand our own due diligence sup-port the general view within theindustry that Lightspeed’s cloud-based POS software system is a re-liable choice for retailers andrestaurateurs with complex needsand a desire to leverage its omni-channel capabilities (for in-storeand e-commerce). Lightspeed isconsistently ranked among thetop three platforms. Its strongmarket share positions in retailverticals such as biking, pets, ap-parel and jewelry support ourconclusion.

“We expect approximately 50per cent annual revenue growthover the next two years. Light-speed’s strong cloud offering sup-ports the achievement of our fore-cast, and a valuation of 10-timesforward revenue.

“The valuation is attractive,with upside on payments adop-tion. Lightspeed trades at eighttimes our conservative fiscal 2021revenue. Peers trade at 10-times.Our forecast assumes only sevenper cent of customer locationsadopt payments. We expect full po-tential of 50 per cent to be reachedin a few years.

“Holding all other assumptionsconstant, at 20 per cent adoptionthe share price could be $33 and at50 per cent adoption up to $55 us-ing a straight nine times enterprisevalue to sales multiple.

“Lightspeed’s founder-led man-agement team and board has a highpedigree and a strong track record,with a competitive product offeringand compelling opportunities thatcan be leveraged with the compa-ny’s business plan. Lightspeed isled by its founder and CEO, DaxDasilva, who owns 17.9 per cent ofthe shares and 46.6 per cent of thevotes on a fully diluted basis and in-cluding the full over-allotment.

“Our baseline forecasts for fiscal2020 and 2021 assume an averageof two per cent and 7.4 per cent of

total customer locations, respec-tively, are using Payments. This as-sumes an average of 1,225 mer-chant locations in fiscal 2020 and5,500 merchant locations in fiscal2021. For context, Lightspeed’scustomer location count grew byapproximately 7,300 and 6,400 infiscal 2017 and 2018, respectively.

“We forecast growth of approx-imately 8,100, 11,350, and 13,900 infiscal 2019, 2020 and 2021, respec-tively. We forecast revenue of $103million in fiscal 2020 and $155 mil-lion in fiscal 2021. We expect Pay-ments revenues to be US$5.8 mil-lion in fiscal 2020 and $32.5 millionin fiscal 2021. We estimate EPS of -US$0.13 in fiscal 2020 and -$0.09in fiscal 2021.”

Lightspeed provides an easy-to-use, omni-channel commerce-en-abling SaaS platform. Its softwareprovides customers with the func-tionality to engage with customers,manage operations, accept pay-ments and grow their businesses.Lightspeed’s platform is currentlyused at 47,000 customer locationsand processes over $13 billion ingross transaction value.

PFBACUMEN CAPITALStrong results from top tobottom

Digested from a March 11 reportby analysts Nick Corcoran and Brian Pow

PFB Corp. (PFB-TSX/VEN,$10.65) released strong fourth-quarter 2018 results which werewell above Messrs. Pow and Corco-ran’s estimates, as well as the con-sensus. They cite rising demandsouth of the Canadian border forthe beat.

This is also the third consecu-tive quarter that PFB has beatenthe analysts’ estimates. They main-tain their “speculative buy” ratingwith an increased $13 per-sharetarget price (from $11.25).

Believing the good quarterly re-sults “have set the stage for a strong2019”, the analysts list organicgrowth and price increases havingbeen the main driving force fortop-line revenue growth in the pastand moving forward. Meanwhilestrategic initiatives and styreneprices have driven margin im-provement, helping to maximizeits bottom line too, the analystsproclaim.

Importantly to them, manage-ment is on track to reach its targetof $200 million in revenues. For thefourth quarter, revenue of $35.3million (up 25.8 per cent year-over-year) beat the Acumen’s estimateof $29.1 million and consensus of$29.4 million.

The various in estimates wasdue to geography, Messrs. Pow andCorcoran state, pointing to the U.S.segment increasing 42 per cent (ex-cluding foreign exchange) year-over-year, while the Canadian seg-ment rose 12 per cent. The Ameri-can segment came in well abovetheir estimates of $10.3 million at$16 million.

As a percent of revenue generaland administrative costs related tosales were 14.4 per cent this year,down from 16.2 per cent last year.This, according to the analysts,“reflects the operational leveragein the business with increasedscale”. As a result of better top-

and-bottom line performance,earnings per share of $0.31 beattheir estimate of $0.15 and con-sensus of $0.20.

Furthermore, Styrene costs inthe fourth quarter softened due tohigher global inventories, lowerglobal demand related to the ongo-ing U.S./China trade dispute; andno unplanned production disrup-tions. Styrene prices in the firstquarter are below levels of first-quarter 2018 and appear relativelystable to Acumen’s analysts, andexpecting it to have a positive effecton gross margin for its near-termresults.

PFB is a vertically-integratedmanufacturer of high-quality in-sulation products across NorthAmerica.

Fortress GlobalEnterprisesRAYMOND JAMES FINANCIALNear-term headwinds dissolve target price

Digested from a March 28 reportby analyst Daryl Swetlishoff

Fortress Global EnterprisesInc. (FGE-TSX, $1.20) misses Mr.Swetlishoff’s expectations for thefourth quarter of 2018, saying thatit is facing headwinds in the dis-solving pulp market (DP). As suchhe reduces his DP forecast result-ing in a $1 decrease to his targetprice to $2 per share. Note, DP isbleached wood pulp or cotton lin-ters, which can be spun into textileor plastic-like fibers or films.

His “outperform” recommen-dation for Fortress Global Enter-prises, however, is a function ofstrong leverage to DP prices withadditional upside from the ac-quired Xylitol venture (under thesubsidiary of Fortress Xylitol Inc.).Xylitol is an organic sweetener.FGE entered into a Technology Li-cense and Collaboration Agree-ment with Mondel_z InternationalInc. of Illinois, one of the world’slargest snacking companies.

The analyst notes that DP mar-kets have come under pressure re-cently leading to his temperednear-term outlook. DP pricespulled back throughout the fourthquarter averaging roughly US$915per metric tonne (down by abouttwo per cent quarter-over-quarter)while the slightly lower Canadiandollar value resulted in relativelyflat prices.

Pressure on dissolving pulp hasbeen apparent, however, with flexmills in China producing more DPand increased imports from In-donesia to China. This has resultedin downward pressure on hard-wood DP, with selling in theUS$870-to-US$880 per metrictonne range of late.

For the fourth quarter, Fortressreported operating profits of $4.2million (from continuing opera-tions), lower than the analyst’s es-timate of $5.5 million. Relative tothe third quarter mark of $7.5 mil-lion, results were down 44 per centquarter-over-quarter due to lowersales and higher costs.

Fortress Global Enterprises is agrowth oriented pulp manufactur-er focusing on the production ofspecialty cellulose for sale in worldmarkets.

Continued from preceding page

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Issue 9 / 19 WHAT THE BROKERS SAY ABOUT CANADIAN STOCKS May 10, 2019 / 191

I N V E S T O R ’ S D I G E S T

MediPharmLabsMACKIE RESEARCHSolid results for cannabisoil extractor

Digested from a April 4 report by analysts Greg McLeish and Nicola McFadden

The analysts keep their thesisfor MediPharm Labs Corp. (LABS-TSX/VEN, $3.62) intact, saying thecannabis oil extraction companydelivered solid fourth-quarter 2018results. They keep their “buy” rec-ommendation and $6 per-sharetarget price.

On April 3, MediPharm Labs re-ported its fourth-quarter results forthe period ended Nov. 30, 2018.The results for quarter and the yearare outlined with quarterly revenueof $10.2 million - which was in linewith the analysts’ estimate.

Operating profit for the quarterwas $2.1 million (21 per cent mar-gin) and this was significantly high-er than their $1.4 million (14 percent margin) forecast. This beatwas primarily attributable to low-er-than-forecast general and ad-ministrative expenses, as well assales and marketing expenses.

Net loss for the quarter was -$3.5 million (or -$0.04 per fully-di-luted share). It is normal for mari-juana companies today to show aloss, they add. However, this figureincluded a $4.2 million expense re-lated to the company’s qualifyingtransaction that occurred in Octo-ber 2018. After removing expensefrom the company’s earnings theanalysts estimate that the compa-ny would have reported net in-come of approximately $500,000,which breaks even at $0 per share.

The company also reported anet cash position of $7.9 million.Subsequent to the quarter anumber of options and sharepurchase warrants were exer-cised which increased the cashposition of the company by ap-proximately $3.2 million. Fur-thermore, like many marijuanacompanies, MediPharm is signif-icantly increasing its productionlevels and offering more exposurefor its retail branding.

MediPharm produces pharma-ceutical-grade cannabis concen-trates using proprietary supercrit-ical carbon dioxide and ethanolextraction processes. The compa-ny’s five primary extraction linesoperate in 10,000 square feet of itsfacility and produce 10-to-15 kilo-grams of resin per day, with an av-erage active cannabinoid contentof 75 per cent.

Construction of the facility’sPhase 2 is underway and fully-funded. Management expects it tobe operational in the second halfof 2019. The addition of 100,000kilograms annual capacity withthis phase will bring the compa-ny’s total production capacity to250,000 kilograms per year, posi-tioning MediPharm as one of thelargest extraction service providersin the industry.

MediPharm also recentlylaunched its White Label Solu-tions platform. On April 1st, thecompany launched a new pro-gram as a strategy to capture theexpected demand for derivativeproducts this year. MediPharm’sWhite Label program will provide

formulation, processing, packag-ing, and distribution to its part-ners, fulfilling growing consumerdemand for branded products, theanalysts state.

The White Label platform willbe of greater use when the federalgovernment legalizes cannabisedibles and concentrates in Cana-da (set for October 2019). Accord-ing to market data, cannabis flow-er sales in Colorado and Oregandominated market share upon le-galization, but saw a rapid declineand a subsequent increase in con-centrated oils market sharethrough 2018. If this trend forcannabis oils happens in Canadaas well post legalization ofcannabis edibles, the analysts sug-gest MediPharm is very capable ofprofiting from it.

A first mover in extraction ser-vices, MediPharm Labs received itsoil production license in March2018 and was the first exclusively li-censed for cannabis oil extraction inCanada.

BRPDESJARDINS CAPITAL MARKETSSentiment and fundamen-tals disconnected: analyst

Digested from a March 25 reportby analyst Benoit Poirier

The analyst headlines hisfourth-quarter fiscal 2019 (periodended Jan. 31) recap of BRP Inc.(DOO-TSX, $35.61) by stating thereis a disconnect between marketsentiment and fundamentals. Hesuggests its lower share price (wasover $70 in Sept. 2018) is unde-served, and provides a buying op-portunity for investors.

While he remains bullish onthe recreational-vehicle maker,with a “buy” recommendation -especially after it posted strongfourth-fiscal quarter (period end-ing Jan. 2019) results - he reduceshis earnings per share forecast forthe coming years. The downwardestimates forced him to reducehis target price to $65 per sharefrom $74.

“We remain bullish on thename in light of its unmatched re-tail sales momentum, potentialgrowth opportunity associatedwith the Can-Am Ryker (three-wheeled side-by-side vehicles),proven track record of marketshare gains through innovation,and attractive valuation. We alsoexpect that management will beactive with (share buybacks) to cre-ate value for long-term sharehold-ers,” Mr. Poirier states.

Revenue of $1.506 billion (up 23per cent year-over-year) during thefourth quarter beat the analyst’sforecast of $1.359 billion and con-sensus of $1.417 billion. Normal-ized fully-diluted earnings pershare (EPS) of $0.88 also beat hisestimate of $0.77 and the consen-sus mark of $0.83. All segmentscontributed to the year-over-yearrevenue increase, with stronggrowth in seasonal products (up 32per cent year-over-year) and year-round products (up 17 per centyear-over-year).

For fiscal 2020, BRP guided toseven-to-11 per cent year-over-year revenue growth and normal-ized EPS of $3.50 to $3.70. Mr.Poirier expects adjusted fully-dilut-ed EPS of $3.59 in fiscal 2020 (down

from $3.61) and $3.81 in fiscal 2021(versus $4.08 initially). For fiscal2020, he expects revenue and nor-malized operating profits to in-crease seven per cent and 19 percent, respectively.

BRP designs, develops, manu-factures, distributes, and marketssnowmobiles, all-terrain vehicles,and personal watercraft vessels.

EncanaALTACORP CAPITALCoverage transferred afterdeal completion

Digested from an April 8 report by analyst Thomas Matthews

AltaCorp transferred coverageof Encana Corp. (ECA-TSX, $7.16;ECA-NYSE, US$7.27) to Mr.Matthews after the Calgary-basedcompany, firstly, completed theNewfield Exploration deal and,secondly, issued a formal capitaldeployment guidance.

“With the acquisition of New-field, Encana is now firmly in thecross-border resource play cover-age group (rather than CanadianOil Sands and Integrated names),”says the analyst.

“Although it is the largest of thecross-border names under cover-age, it will still be important tomonitor changes to productivity,completion styles, cost trends,area specific infrastructure chal-lenges and most importantly cubedevelopment results in order toanswer the ultimate question:does Encana create value forshareholders?”

According to the analyst, Alta-Corp doesn’t really believe in ex-pansion for the sake of expan-sion, and has backed this up byshowing that past production ex-pansion does not always trans-late to value creation. While thisis particularly evident in Canada,it is more and more becomingthe case in the lower 48 south ofthe border.

For investors looking to invest inEncana, Mr. Matthews focuses onwhat they are actually paying for.

“Most energy companies tradeat a value higher than the blowdown cash flow of the current as-sets, implying that the market isgiving credit for future inventory,land value or drilling upside,” saysthe analyst.

“Based on our PDP methodol-ogy, we attempt to quantify whichassets are fully baked into thestock and which assets can be hadfor ‘free’. Based on our assump-tions for Newfield’s base PDP anda five-year development programat the current pace in the Permian,Eagle Ford, Williston Basin andDuvernay, we calculate that theAnadarko, Montney and Uintacan be had for ‘free’ with an in-vestment in Encana at today’sshare price.”

The company is projected toachieve an average of about fiveper cent free cash flow (FCF) aswell as a dividend yield over thecoming 24 months while also ex-panding production per share byapproximately 15 per cent.

“Encana’s FCF yield is belowthat of the integrated Canadiannames, however Encana is forecastto deliver significantly largergrowth rates (PPS and PDP) thanthe largest Canadian names whiletrading at 4.8 times,” says the ana-

lyst. “In addition, Encana’s FCFyield and growth rate is in line withsome of the consensus ‘top pick’US/Permian names but is tradingat a significant consensusEV/EBITDA discount of 4.9 times.”

Mr. Matthews reiterates his“outperform” recommendationbut boosts his target share price bya loonie to $11.

Encana is a Calgary-based nat-ural gas company engaged in hy-drocarbon exploration.

Centric Health BEACON SECURITIESThe turnaround we havebeen waiting for is upon us

Digested from a March 29 reportby analyst Doug Cooper

Centric Health Corp. (CHH-TSX, $0.30) is looking to discon-tinue its surgical segment, whichanalyst Doug Cooper sees as thenext key catalyst for the stock. Mr.Cooper believes Centric will ob-tain a material price for the surgi-cal assets of $50 million to $60million, which will enable it to

materially de-lever.Mr. Cooper gives the stock a

“buy” rating and $0.75 target shareprice, down from $0.90.

Mr. Cooper provides further de-tails on the financial results, “Whilethe fourth-quarter fiscal 2018 re-sults were down on a year-over-year basis (as expected given theregulatory changes earlier in 2018),the results were much improvedversus the third quarter of fiscal2018. In particular, fourth quarterrevenue was $30.9 million versus$29.7 million in the third quarter(four per cent growth) driven by a2.2 per cent sequential growth inthe bed count (29,761 as of Dec 31).

“Segment EBITDA (earningsbefore interest, taxes, depreciationand amortization) margin (beforecorporate overhead) also improvedby 210 basis points to 6.9 per cent.The company indicated that firstquarter of fiscal 2019’s margin wasnine per cent (on anticipated high-er revenue as first quarter endedbed count was approximately31,000) and that it expects marginsthereafter to be ‘double-digit’.

“Historically, this segment en-joyed annualized EBITDA margins

Largo ResourcesCIBC WORLD MARKETS

Compelling risk-to-reward scenarioDigested from a April 1 report by analysts Bryce Adams

and Eve Hurowitz

The analysts’ initiate coverage of Largo Resources Ltd. (LGO-TSX,$2.10) by declaring it one of the few pure plays on the vanadium mar-kets, offering a “compelling risk-reward scenario”. They give Largo an“outperformer” rating and a 12- to 18-month price target of $4 pershare. Their upside-case outlook assumes that the new stricter stan-dards in China are implemented quickly and firmly, leading to higherdemand for vanadium in rebar and a more significant supply deficit.China accounts for 45 per cent of total consumption.

Largo is a high-purity vanadium producer. The high-purity marketcomprises roughly 10 per cent of the total vanadium market, and Largocan supply about 60 per cent of this specialized demand. High-purityvanadium yields a price premium over and above standard vanadium,and Mr. Adams and Ms. Hurowitz explain that it can benefit from Chi-na opting for purer vanadium. They see demand for vanadium exceed-ing supply until 2023.

With Largo being low-cost in an elevated pricing market, the ana-lysts model a 2019 free cash flow yield of 20 per cent (and even greaterfor the next five years). With that cash, they expect Largo to focus onshareholder returns, buybacks or special dividends.

“We estimate Largo will be debt free and still be able to pay out a $0.30dividend by 2019 year-end. This represents a dividend yield of over 10per cent, greater than the industry average of 2.5 per cent,” they say.

As of Dec. 31, 2018, Largo held $206 million in cash and cash equiv-alents, total working capital of $135 million, and debt of $117 million.The company has since reduced its debt significantly by repurchasingand retiring amounts during this first quarter - with the plan to retirethe remainder of the outstanding debt by the second quarter.

“We forecast a steadily increasing cash balance going forward, withthe company generating cash flows from operations (before workingcapital) of about $230 million in 2019 and about $430 million in 2020and no further debt repayments following the second quarter, whenthe senior notes are fully retired,” they remark.

Another highlight for the analysts is Largo’s 100 per cent offtakeagreement with Glencore PLC (the Swiss-British commodity tradingcompany). As per the agreement, Largo does not control the end-mar-ket distribution of its products - for now. The offtake expires in May 2020.Thereafter its expiration, the analysts say they conservatively expectLargo to receive a US$1.50 per pound premium price for its high-purityproduct compared to management’s expectation of US$3-to-US$4 perpound - when they expect prices to rise in their aforementioned upside-case scenario until 2023 when vanadium supply meets demand.

Their downside-case outlook assumes new stricter standards arenot implemented in China, a global economic slowdown, and in-creased niobium substitution (with deposits being dug in Nebraska byNioCorp Developments Ltd.), resulting in excess supply by 2021.

Largo Resources is a mineral company focused on the production ofhigh-purity vanadium products at the Maracás Menchen mine in Brazil.

Of Special InterestContinued on next page

192 / May 10, 2019 WHAT THE BROKERS SAY ABOUT CANADIAN STOCKS Issue 9 / 19

I N V E S T O R ’ S D I G E S T

of 12 per cent to 14 per cent. A re-turn to such double digit marginswould be a return to levels last seenin the third quarter of fiscal 2017.We are now modeling segmentmargin of 11 per cent in fiscal 2019and 14 per cent in fiscal 2020.

“Concentrating our forecasttherefore on the specialty phar-macy segment, we are now mod-eling period ended beds of 32,500(31,250 average for year) and36,000 (34,350 average) for fiscal2019 and fiscal 2020 respectively.Using the fourth quarter fiscal2018 annualized revenue per bed($4,150), we arrive at revenue of$130 million and $142.6 millionrespectively. At an 11 per cent and14 per cent segment margin andfour per cent corporate overhead,we arrive at EBITDA of $9.1 mil-lion in fiscal 2019 and $14.3 mil-lion in fiscal 2020. This wouldmark a dramatic improvementfrom the third quarter of fiscal2018 annualized nadir level of $5.6million thanks to the operationalimprovements the company hasmade over the past six months.”

Centic Health primarily focuseson two core health-care businesses:Specialty Pharmacy services agrowing network of fulfilment cen-tres that deliver high-volume solu-tions to seniors’ residences and theSurgical and Medical division isCanada’s largest independent sur-gical provider operating six facili-ties across four provinces.

Cresco LabsPI FINANCIALBuilding a cannabis em-pire in the U.S.

Digested from an April 4 report by analysts Jason Zandberg,Devin Schilling and Fayassir Haqna

Being a multi-state operator(MSO) with cannabis operationsin eleven U.S. states, the analystsclaim Cresco Labs Inc. (CL-CSE,$16.70) is building an empire.They initiate coverage with a“buy” recommendation and $23per-share target price.

Cresco operates, or will soon op-erate, in states with a combined pop-ulation of 151 million or 68 per centof the total population of 220 millionpeople in medical/recreationalstates. Cresco also has licences inseven limited licensed states. Ac-cording to the analysts, this allowsCresco to establish a market pres-ence early in these state’s cannabisevolution before full recreational useis implemented (Illinois and NewYork are two prime examples).Cresco manufactures and packagesa wide spectrum of over 500cannabis products. Furthermore,Origin House, a recent acquisition,has over 50 brand relationships.

The Origin House includes thelargest California distributor net-work. In total, Cresco has distribu-tion in over 725 dispensaries in theU.S. including 500 in California alone

(or about 60 per cent of the marketshare) - “where a professional distri-bution company is essential for long-term success,” the analysts state.

They add, “Origin House hasconsolidated two successful dis-tributors (RVR and Alta Supply)and quickly became the industryleader. This distribution arm hasbeen built by Ted Simpkins, whohad been successful as an alcoholdistributor building Southern Wineand Spirits into California largestwine and spirit distributor.

“We expect dispensary countsto grow considerably in the nextfew years and we believe that thecompany’s exposure will maintainor increase from its current 60 percent market penetration level.”

Revenue growth is driven byboth dispensary sales as well as itswholesale revenue for brandedproduct sold in third-party dispen-saries. The analysts believe this ap-proach will drive superior growthrelative to some other MSOs.

Cresco’s reported operatingprofit margins of 44 per cent in itsrecent quarterly financial disclo-sure (third quarter of 2018). Thismargin is the second highest of anyof the U.S. multi-state operators re-ported to date. The analysts fore-cast sales of US$42.9 million,US$335.4 million and US$774.9million for fiscal 2018, 2019 and2020, respectively. Net earningsforecasts for the same period areUS$10.2 million, US$77.3 millionand US$227.2 million.

Cresco Labs (formerly Rands-burg International Gold Corp.) is

engaged in the cultivation and dis-tribution of cannabis.

WajaxRAYMOND JAMES FINANCIALQuarterly results are agrinding setback

Digested from a March 25 reportby analyst Ben Cherniavsky

The analyst says he saw so manyproblems with Wajax Corp.’s (WJX-TSX, $16.26) fourth-quarter 2018results that he claims he doesn’tknow where to start. He lowers histarget price to $17 per share from$26.50, but keeps his “market per-form” recommendation.

“The stock’s (recent one-day)17 per cent decline says it all. Thisquarter marked a major setback tothe ‘One Wajax’ strategy,” Mr.Cherniavsky says.

For the fourth quarter, resultsmissed Mr. Cherniavsky’s forecastby nearly every measure. Wajax re-ported adjusted earnings per share(EPS) of $0.41, well below consensusof $0.62, and the analyst’s forecast of$0.69. It also came in below lastyear’s fourth-quarter EPS of $0.45.

Revenues of $390 million were 11per cent below his forecast; grossprofit margin ratio of 17.2 per centwas 100 basis points as well. Gener-al, sales and administrative costs asa percent of revenue was 14.1 percent, compared to their estimate of

13.3 per cent, with interest expenseswas $700,000 above his expectation.

On top of the major earningsmiss, Wajax noted non-cash ac-counting errors that resulted inoverstated earnings for prior years!Management revised its 2017 andnine-month 2018 unadjusted EPSdown to $1.50 from $1.35, andfrom $1.60 to $1.47, respectively.Furthermore, net debt closed theyear at $236 million, up 20 per centquarter-over-quarter. The increasewas primarily driven by the $52-million acquisition of the Quebec-based electromechanic company,Groupe Delom Inc. last fall.

“We expressed concerns aboutthe company’s (One Wajax) effortsto gain market share through ag-gressive pricing, a tactic that effect-ed gross margin erosion last quar-ter. We also warned about the com-plexities of managing conflictingbrands in the same product cate-gories, which has since manifesteditself into some related supply prob-lems in forestry (i.e. falling lumberprices leading to declining produc-tion),” Mr. Cherniavsky says.

“Add slowing growth in endmarkets, increased leverage and anover-statement of past earnings tothe equation and we see no reasonto alter our cautionary thesis orchange our recommendation onthis stock,” he concludes.

Wajax is a distributor engagedin the sale and after-sales parts andservice support of mobile equip-ment, industrial components andpower systems.

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Continued from preceding page

Issue 9 / 19 WHAT THE BROKERS SAY ABOUT U.S. STOCKS May 10, 2019 / 193

I N V E S T O R ’ S D I G E S T

Dividends are a big part ofany corporation’s re-sponsibility to its share-holders. When a com-

pany has a good year, its profitmust be paid out to its sharehold-ers to reflect their importancewithin the company.

DOWDOW-NYSE, $53.50

Credit SuisseChristopher Parkinson

The analyst initiates coverage ofDow Inc. with an “outperform”stance and $62 target share price.Mr. Parkinson’s favourable thesis isbased on his belief that cash flowgeneration will improve to about90 per cent of EBITDA (earningsbefore interest, taxes, depreciationand amortization), up from a 77per cent average between 2015 and2017, representing $1 billion in ad-ditional free cash flow.

The analyst goes into furtherdetails noting positives such as“Dow’s diversified portfolio acrossits three segments, PerformanceMaterials & Coatings, IndustrialIntermediates & Infrastructureand Packaging & Specialty Plasticsshould mitigate downside riskversus peers, while offering ampleopportunity to outperform overthe cycle, all while improving cashconversion. This supports a valu-ation level at the high end of thecomp group, equating to approxi-mately seven times our 2020 EBIT-DA estimate and a 4.5 per centdividend yield.

“Our expectation that plasticsmargins will steadily improve onstable global demand and ‘bal-anced’ new supply. There shouldalso be steady improvement in theII&I segment during second half of2019 (off of a low second half of2018 base). We anticipate in thefirst half of 2019 ‘headline’ risk dueto trade noise and Euro macrostagnation, but believe DOW’s$2.81 per share dividend and $3billion buy-back should limitdownside risk until second halfconditions improve. In the long-term, we anticipate improving ex-ecution (versus historical prece-dent), refined disclosure, and dis-ciplined capital deployment arecause for enthusiasm.”

NIKENKE-NYSE, $88.01Goldman SachsAlexandra Walvis

Nike Inc. played reasonablywell, reporting fiscal third-quarter2019 earnings per share of $0.68,above the analyst’s estimate of$0.66. The analyst does point outthat this quarter’s beat was largelydriven by taxes, other income (for-eign exchange gains and losses),and a timing shift on supply chaininvestments within gross margins.

The analyst highlights that salesin the critical North America seg-ment fell short of expectations.This, combined with weaker re-sults at subsidiary Converse, wasonly partially offset by stronger rev-enue delivery across Europe, theMiddle East, Africa, China, Asia Pa-cific and Latin America. “Lookingforward, Nike’s fourth-quarterguide is weaker than expectations.On balance, we remain optimisticon Nike’s revenue growth opportu-nities and believe the company isshowing healthy growth as a resultof several innovation initiativesacross key product families. Thatsaid, our conversations with in-vestors suggest this top-line story iswell-understood.

“Selling, general and adminis-trative as a percent of sales washeavy relative to expectations at32.2 per cent versus analyst andconsensus estimate of 31.6 and31.7 per cent, with Nike highlight-ing elevated spend in technologyand direct-to-consumer to fuelgrowth. Other income related toforeign exchange losses also was acritical tailwind in the quarter,driving the majority of the EBIT(earnings before interest and taxes)beat.” The analyst gives the stock a“neutral” recommendation and$84 target share price.

TESLA TSLA-NASDAQ, $291.81

Goldman SachsDavid Tamberrino

Tesla Inc.’s vehicles, the ModelS/X and Model 3 first-quarter 2019deliveries came in well below theanalyst’s estimates and consensusexpectations, and both declinedfrom fourth-quarter 2018 levels.Mr. Tamberrino believes that de-mand will likely be hindered by thephasing-out of the U.S. federalelectric vehicle tax credit. Morenegative news includes productionlevels that disappointed in thequarter. The Model 3 weekly pro-duction achieved an average of ap-proximately 4,800, only slightlyhigher than the 4,700 in fourthquarter of 2018 and below the ana-lyst’s estimate of 5,500 per week forthe first quarter of 2019.

The analyst gives the stock a“sell” recommendation and a $210target share price.

He notes, “Despite the deliveryresults falling sequentially, thecompany said that they continueto see Model 3 orders in the U.S.outpacing what they can deliver(although we think this was likelyhelped by price reductions and theintroduction of the $35,000 Model3) and reaffirmed their 2019 deliv-ery guidance of 360,000 to 400,000.The company also noted that firstquarter 2019 net income would benegatively impacted by these low-er delivery results. However, wethink the disappointing resultslikely put pressure on consensusestimates for the full year especial-ly for Model S/X deliveries.

“Altogether, the delivery resultswill put pressure on Tesla’s shares,and corroborates our belief volumeexpectations for its products in2019 are too high with consumerdemand likely lower as subsidiesphase out,” says Mr. Tamberrino.

“Further, this likely puts down-ward pressure on our EBITDA(earnings before interest, taxes, de-preciation and amortization) andfree cash flow estimates, as well asconsensus, given the lower volume

levels and worse utilization thananticipated.”

WINGSTOPWING-NASDAQ, $71.76BMO Capital Markets

Andrew Strelzik

Analyst Mr. Strelzik comparesWingstop Inc. to a unicorn, sayingthe nostalgic, aviation-themedrestaurant has unique characteris-tics as a stock investment. Thoughexpensive at over $70 per share, hestill feels it is undervalued. He ini-tiates coverage of Wingstop with an“outperform” rating and $85 pershare target, offering 15-to-20 percent potential upside.

So what makes WING sounique to Mr. Strelzik? Well he saysit offers the “desirable combina-tion of long-tailed unit growth andsuperior operating/growth met-rics, but in an asset-light modelthat enables cash returns to share-holders at levels usually reservedfor slower growth mature peers”.

According to him, these charac-teristics make Wingstop “amongthe most attractive long-termgrowth investment opportunities”in the restaurant sector. He expectsWING to modestly exceed consen-sus 2019 and 2020 earnings esti-mates, with strong comparablesmomentum starting in late 2019.

“We expect WING to realize atleast mid-teen system sales growthand 15 per cent or greater in oper-ating-profits growth for the fore-seeable future, with strong cash re-turns to shareholders on top.

“Our discounted cash flowmodel implies upside to our pricetarget as we derive current value of$100 and estimate WING couldachieve our price target by reachingonly 5,000 units. Proprietary real es-tate analysis provides confidence inthe U.S. target of 3,000 units/loca-tions (about 1,125 currently)”

He adds that profit margins willimprove dramatically starting inthe fourth quarter of this year dueto the expected expansion of theU.S. chicken industry. Thereafter,

he suggests restaurant marginsshould improve thanks to betterlabour and operating costs.

MOSAICMOS-NYSE, $27.14

CIBC World MarketsJacob Bout and Rahul Malhotra

Messrs. Bout and Malhotra at-tended the Mosaic Co.’s 2019 Ana-lyst Day in Florida on March 28,where management spoke to its2021 operational targets. It alsoprovided an outlook for phosphateand potash markets, which the an-alysts describe as “balanced” sup-ply-and-demand-wise.

All in all, they are assuming flatpricing and about eight per centcompounded annual growth rate(CAGR) over Mosaic’s 2019 mid-point guidance. The companymade no changes to its 2019 guid-ance, but expects weakness in theearly part of 2019 due to the latestart in spring activities.

Even the wildcard of Chinesephosphate export levels in 2019does not change their model forMosaic, so the analysts maintaintheir “neutral” recommendationand $34 share price target.

Overall, Mosaic expects reason-able earnings before interest, taxes,depreciation and amortization(EBITDA) growth, in the form of a$600 million EBITDA increase in2021 versus the midpoint of 2019.The EBITDA guidance lists $2.3 bil-lion for 2021.

But about $200 million of this$600-million EBITDA increase isprice driven. Assuming flat pricing,this implies an overall $400-millionEBITDA - or about eight-to-nineper cent CAGR over a two-year pe-riod. About half of the EBITDAgrowth will come from MOS’ inter-nal operational and strategic im-provements while about a $100-million increase is driven by high-er volumes, according to manage-ment’s expectations.

Lastly, Mosaic forecasts 2019potash markets to be in a slightdeficit by about 300,000 tonnes,

with demand growing by aboutone per cent, or 800,000 tonnes.

3MMMM-NYSE, $215.41

Credit SuisseJohn Walsh

In March, 3M Co.’s CEOMichael Roman confirmed first-quarter 2019 organic growth wasflat-to-slightly negative throughFebruary due to continued weak-ness in automotive and electronicsin the Asia-Pacific region. Thecompany has dropped its calendar2019 growth estimates for its auto-motive sector, normally highlyprofitable. Analyst John Walsh pre-dicts “mixed pressure” for thecompany overall in the very nearterm with a recovery soon after.The analyst keeps his “outperform”recommendation and target priceof $220 per share.

“We see risk to the high end offiscal 2019 earnings per share(EPS) guidance based on lowerorganic sales growth (currentguidance is one-to-four per cent).In aggregate, we see 70-to-90 ba-sis points of earning downsiderisk at the mid-point of 2019,”says Mr. Walsh.

The analyst modestly reduceshis first-quarter EPS forecast to$2.50, which results in a 2019 EPSforecast drop of a dime to $10.65.He decreases his 2020 and 2021forecast to $11.50 and $12.55 pershare, respectively.

The $220 target price equates toa 10 per cent peer premium, large-ly based on 3M’s ability to “accel-erate organic sales growth drivenby product differentiation, easiersecond-half 2019 comparables,and cyclical-versus-secular pres-sures in the automotive and elec-tronics segments,” says the analyst.The company’s 2019 free cash flowyield will be 4.9 per cent, accordingto his estimates.

The company has also an-nounced it will realign from fivesegments to four segments (in thesecond quarter).

A new era has been dawning atWalt Disney Co. since the companyclosed its $70-billion acquisition of21st Century Fox in March and theapproaching debut of its streamingservice in late 2019. The company continues to packa punch in the analyst’s eyes as he reinstates thestock’s “buy” recommendation and sets a $142 tar-get share price, a potential upside of 28 per cent.

The analyst notes, “We see the Fox acquisitionresulting in economies of scale, increased bargain-ing power with distributors, content diversification(i.e., Fox’s edgy adult programming), and increasedinternational reach. We estimate $2 billion in costsynergies by the two-year anniversary, or 11 percent of fiscal 2019 pro-forma operating income.”

With regards to the streaming platform the ana-lyst sees this as the mark of a momentous shift inthe company’s norm of content monetization fromthird-party licensing to direct-to-consumer stream-ing. They go on to note, “Despite our expectationfor near-term investment headwinds, we view Dis-ney+ streaming as a positive long-term strategy giv-en the rising importance of developing direct-to-consumer relationships, with higher long-run mar-gins (from absorbing third-party distributor profits)and better customer data about consumption.

“Although there are inherent risks in enteringthe competitive U.S. subscription video on demand(SVOD) market, DIS should be able to leverage its

brand strength and robustportfolio of content to createa mass market streamingbundle with Disney+ (for fam-ilies as well as science-fiction

and super hero superfans), Hulu (with edgier pro-gramming for adults) and ESPN+ (sports), all for acompetitive retail price.

“With so much attention on Fox and direct-to-consumer, we think the market may be underap-preciating growth in Disney’s core Parks and Filmbusinesses. The domestic parks (still 25 per cent ofpro-forma operating income) are poised for accel-erating growth in fiscal 2019 and 2020 driven by a10 per cent ticket price increase - which is nearlytwo times the trailing run-rate. Major new themepark attractions are a boost, both the recentlylaunched (Pandora: World of Avatar in 2017, ToyStory Land in 2018) and soon-to-launch Star WarsLand in 2019. History shows that major new attrac-tions drive a meaningful and sustained improve-ment in park attendance. The park price increase isobfuscated by the implementation of seasonal pric-ing for Walt Disney World multi-day tickets and ap-pears underappreciated by the consensus. Our fis-cal 2019 and 2020 domestic parks operating incomeis seven per cent above consensus estimates.

“The calendar 2019 film slate is especially ro-bust, with franchise films with ample consumerproducts opportunities.”

A market darling once againWALT DISNEYDIS-NYSE, $112.52Goldman Sachs

Drew Borst

NOTA BENEMPL’s Investment Planning

Committee recommendsthat around 25 per cent of aCanadian investor’s stockportfolio be in U.S. equities.This allows greater diversifica-tion. But when investing in theU.S., the focus should be oncompanies that Canada lacksor has in short supply.

194 / May 10, 2019 I N V E S T O R ’ S D I G E S T Issue 9 / 19

WHAT THE MARKET LETTERS SAY

Over the past two weeks, arecurring theme hasrepeatedly come upamong the letters and

analysts we follow: infrastructurespending. The world needs torevamp its infrastructure, accord-ing to various studies. In the nextcouple of decades, the cost ofbringing the world’s infrastructureup to code will easily add up to tril-lions of dollars. One can invest inthose companies that lay down thefoundations of infrastructure, orthe brokerage houses that financethese initiatives. Below, there isalso analysis for the burgeoningU.S. cannabis market, as well as afew medical innovations hittingthe market. - E.A.

The KonLin Letter, 5 Water Road,Rocky Point, NY 11778 U.S.A.,(631)-744-8536, US$95 a year.www.konlin.com

Using its focus on the pharma-ceutical industry, The KonLin Letterpoints to Novan Inc. (NOVN-NAS-DAQ, US$0.90) as its Featured Stockof the Month. NOVN is a clinical-stage biotechnology company aim-ing to leverage nitric oxide’s naturalantiviral and immunomodulatorymechanisms of action to treat der-matological and oncovirus-mediat-ed diseases (i.e. a virus that cancause cancer). Nitric oxide hasbecome one of the most studiedmolecules in human physiology. Infact, the 1998 Nobel Prize-winningdiscovery triggered an eruption ofresearch that now confirms its natu-ral ability to prevent clotting, regu-late inflammation, revitalize tissue,kill invading microorganisms, andeven eradicate cancer cells - makingit an ideal form of dermatologicaltherapy. For example, molluscumcontagiosum is a common, highlycontagious skin infection affectingroughly 6 million Americans annu-ally, with the greatest incidence inchildren between the ages of 1-to-14years old. There are no approvedtherapies for molluscum yet, withpatients requiring painful physicalprocedures or over-the-counterproducts and prescriptions. NOVNrecently announced that results

from its Phase 2 clinical trial to eval-uate SB206 - a test treatment formolluscum demonstrated a cleartreatment effect on the completeclearance of all molluscum skinlesions after 12 weeks, with signs ofefficacy evident within a fortnight.This is encouraging to the advisory.Looking at the financial numbers, itreports that for the first nine monthsof 2018, the company had a net lossof -US$0.77 earnings per share (EPS)versus -US$1.79 for the same periodprior. Cash and cash equivalentsamounted to US$12.2 million. Thestock declined from its October highof US$3.24 to a December low ofUS$0.65. The advisory is holding fora target of US$3.50, and will buy intoit when breaks above US$1.25. Itexpects an ultimate target of US$7-to-US$8, as it expands into theJapanese market for the treatment ofacne vulgaris - a long-term skin dis-ease that occurs when hair folliclesare clogged with dead skin cells andoil from the skin - via Sato Pharma-ceuticals Co. Ltd.

Cabot Dividend Investor, c/oCabot Heritage Corporation, 176 North Street, Salem, MA 01970U.S.A., (978)-745-5532. Introduc-tory one-year rate: US$297.

Chief analyst Tom Hutchinsonsuggests investors profit from the“Great Global Infrastructure Cri-sis”. The American Society of CivilEngineers reviews 15 infrastructurecategories every four years andissues an overall grade. The lastwas in 2017. The grade was a D+.The G-20’s Global InfrastructureHub estimates that a global invest-ment of US$94 trillion will need tobe invested over the next severaldecades. That’s trillion with a T.Governments don’t have all thosetrillions of dollars lying around.The only way to possibly answerthe need is with private money.Governments will have to do someinvesting of course but are alsopartnering with private companieson certain projects as well. “Infras-tructure is becoming a hot invest-ment for private funds to the extentthat it is almost becoming its ownasset class. Limited partnerships,giant sovereign-wealth funds, mul-tilateral and development-financeinstitutions are raising by somemeasurements trillions of dollars ayear for infrastructure investments.Amidst this great opportunity thequestion is where to invest,” Mr.Hutchinson states. In our last issue,we included his top pick of themonth, which he says proved itselfto be among the most worthy play-ers in the space - Brookfield Infras-tructure Partners LP (BIP.UN-TSX,$55.39; BIP-NYSE, US$41.59). Thatsaid however, many of the divi-dend paying defensive studs aretrading at high historical valua-tions. So it’s tough to buy a defen-sive stock after a great year andnear the 52-week high. The analysthas been able to pluck rare valuestocks that rise above the currentconundrum, such as Altria GroupInc. (MO-NYSE, US$56.18), AbbVieInc. (ABBV-NYSE, US$77.98) andEnterprise Product Partners LP

(EPD-NYSE, US$28.87) which heclaims are all fantastic companiesthat offer deep discounts, highyields and downside protection.He provides two other nice oppor-tunities in the portfolio right now.American Express Co. (AXP-NYSE,US$111.76) which operates in anobscenely profitable business withstrong tailwinds over the interme-diate and longer term. It also sellsat a cheap valuation and has fan-tastic momentum. NextEra EnergyInc. (NEE-NYSE, US$189.65),which offers both steady, reliableincome and growth from its lead-ership in clean energy “might bethe best utility stock of all time,”according to Mr. Hutchinson.

Dow Theory Forecasts, 7412Calumet Ave., Hammond, IN46324-2692, U.S.A., (800)-233-5922, US$289 a year.www.dowtheory.com

Hilton Worldwide HoldingsInc. (HLT-NYSE, US$87.24) hasbuilt its company around selling itsfounder’s name and other brandsthat have come under its control,such as Hampton, DoubleTree,Embassy Suites, and Waldorf Asto-ria. Under an umbrella of about 15brands, Hilton now operatesroughly 5,700 hotels and resorts in113 countries. Hilton owns aboutone per cent of these propertiesand manages about 12 per cent ofthem; the rest are franchisedhotels. However, Hilton sharesaren’t cheap. At 31 times trailingearnings, the stock trades below itsfive-year median of 38, yet carries alofty premium to its industry medi-an of 14. Still, Hilton is a “Buy” anda “Long-Term Buy” for the adviso-ry. Hilton focuses on the midscale,upscale, and luxury travel markets.The U.S. is Hilton’s biggest geo-

graphic market, accounting for 77per cent of sales last year, up from65 per cent in 2014. In 2018, Hiltongrew per-share profits 55 per cent,sales 10 per cent, and operatingcash flow 36 per cent. Free cashflow jumped 49 per cent to US$1billion. Seeking to press its advan-tage, Hilton’s pace of expansionranks among the fastest in thehotel industry. Hilton openedmore than 450 hotels last year andhas another 2,400 in its develop-ment pipeline. More than half ofthose forthcoming hotels will beoutside the U.S., with about one-fifth in Europe, the Middle East, orAfrica. The company has a 20 percent global market share of roomsunder construction. Hilton gener-ates most of its business fromlicensing its name to franchises,which requires a low asset baseand capital investment. Hilton isexpected to report per-share prof-its of US$0.76, up 38 per cent, onrevenue of US$2.2 billion, up sixper cent. Average estimated growthfor hotel, resort, and cruise stocksin the S&P 1500 Index is five percent for earnings per share and 14per cent for sales.

Sh o r t t a k e s , p r o , c o n ,maybe: “Buy a half” posi-t i o n o f C a r v a n a C o .(CVNA-NYSE, US$62.98),

says Cabot Growth Investor. Car-vana is revolutionizing the usedcar buying process, making it aseasy, quick and low risk as possi-ble to buy a vehicle online.Throw in relatively quick deliver-ies (next day in some markets)and it’s proven to be a hit - Car-vana’s revenues have been kitinghigher at triple-digit rates formany quarters as it stampedesinto a ton of new U.S. markets(85 markets last December, up to140 by year-end 2019).

Cabot Emerging Markets Investor,c/o Cabot Heritage Corporation,176 North Street, Salem, MA01970 U.S.A., (978)-745-5532.Introductory one-year rate:US$397.

The joint Global InfrastructureHub and Oxford Economics reportestimates that total spending oninfrastructure will be US$94 trillionin the next two decades. That’s astaggering figure. To put it in per-spective, this number is consider-ably more than total world GDP in2018. And in just the next five years,some experts expect the amount ofcash injected into global infras-tructure to reach US$26 trillion, ormore than the annual GDP of theU.S., Canada and Mexico com-bined. Analyst Carl Delfeld says,“And that’s why our new recom-mendation is Largo Resources Ltd.(LGO-TSX, $1.76; LGORF-OTC,US$1.33), which produces aningredient that turns ordinary steelinto ‘super steel’ and is playing anincreasingly important role in elec-trifying the grid.” Largo is a strate-gic mineral company focused onthe production of vanadium flakeat the Maracás Menchen Minelocated in Bahia State, Brazil.Headquartered in Toronto, Largo’sstock has been on a bit of a roller-coaster lately. Just a dollop of vana-dium added to steel doubles itsstrength and reduces its weight by30 per cent. About 80,000 tons ofvanadium are produced per year,with China accounting for abouthalf of production followed by Rus-sia, South Africa and then Brazil (allemerging markets). As vanadiumprices have gone up, so has Largo’sshare price. During the past year,LGORF went from US$1.09 to ahigh of US$3.39 on Nov. 5, 2018.Since then it has come crashingback to earth, trading at a mereUS$1.39 per share, or about 5.3times trailing earnings. As theworld’s lowest-cost producer ofvanadium, Largo seems underval-ued right now at less than six timestrailing earnings. Mr. Delfeld rec-ommends buying only a smallposition right now while he waitsfor first-quarter 2019 numbers toroll in. “I will become more aggres-sive as the stock develops anuptrend, or at prices belowUS$1.30 a share. Either way, ourtarget price is US$2 a share or 60per cent higher than its currentprice,” the analyst concludes.

Global Investing, 1040 First Ave,suite 318, New York, NY 10022U.S.A., US$495 for one year, $888for two years. www.global-invest-ing.com

To editor, Vivian Lewis’ amaze-ment, the local Irish-based bookiechain Paddy Power Betfair PLC(PPB-LSE, £6,646; PDYPY-OTC,US$44.05) has crashed by over fiveper cent in one day. Apparently ittook the counterpart side of betsthat Britain would leave the EU(during mid April) and now faceshuge payouts. In other British Islesnews, she reports that Glaxo-

Infrastructure attracts market buzz

HOTLINEThe hotline number for

Investor’s Digest is 416-869-2777 ext. 800. The hot-

line is intended to keepreaders abreast of informa-tion in Investor’s Digest. It

will be updated regularly onFridays by 6 p.m. eastern

time. The hotline will informreaders about the forth-coming issue and, when

necessary, provide updateson information in the Digest

that might have beensuperseded by events.

DOCUMENTING PROGRESS AND GROWTH

The Bowser Report, P.O. Box 5156, Williamsburg, VA, 23188,U.S.A., (757)-877-5979, US$59 a year. www.thebowserreport.com

The advisory’s Company of the Month is ARC Document Solu-tions Inc. (ARC-NYSE, US$2.45) which is given a nine-out-of-10 score. ARC is a leading document-solutions company serv-ing businesses of all types, with an emphasis on the nonresi-

dential segment of the architecture, engineering and constructionindustries. The company helps customers reduce costs and increaseefficiency in the use of their documents.

ARC Document Solutions’ sales slowly grew year-over-year.Although revenue isn’t growing at a rapid rate, 2018 showed anupturn from the poor guidance initiated in 2015. Management notedpressure from implementation delays in key managed print servicescontracts and lower demand for large-format printing. Since then,share price has dropped 77 per cent, while revenue per share hasslightly increased to US$8.91 per share.

According to the advisory, the company’s high revenue per shareand recent decrease in price per share show a clear undervaluationrelative to its competitors. Additionally, ARC dominates the docu-ment solutions industry and has consistently high sales. ComparingARC’s revenue and net income to its competitors’ exemplifies justhow effective the company is in its niche. Its $400 million in revenuerepresents eight per cent of the total sales for the industry.

ARC is beating the industry average for three main valuation met-rics (price-to-earnings, price-to-sales and price-to-cash flow) by along shot (by 35, 50 and 70 per cent respectively). Its price/cash flowratio is most impressive and rare for a company within the industry.

With the drop in share price over the past four years, ARC sits nearits all-time low and offers a great buying opportunity. As long asmanagement continues to focus on new accounts and a strong bot-tom line, expect ARC to be trading back over US$3 per share.

Issue 9 / 19 I N V E S T O R ’ S D I G E S T May 10, 2019 / 195

WHAT THE MARKET LETTERS SAY

SmithKline PLC (GSK-NYSE,US$39.85; GSK-LSE, £1,540.80), asexpected, won U.S. FDA approvalof its ViiV sub’s Dovato, a once-daily two-drug tablet for HIV inadults. It contains dolutegravir andlamivudine. Ms. Lewis is alsokeeping tabs on Standard LifeAberdeen PLC (SLA-LSE, £277;SLFPY-OTC, US$14.57) after Jef-feries Financial chopped its targetprice from £488 to £361. Anotherfan is Goldman Sachs which has a“buy” rating too, but a lower targetprice of only £244. “Given that theclosed-end fund group gives busi-ness to banks, you can take allthese tips with a grain of salt,” sheconcludes. Looking into the oilpatches, BP PLC (BP-LSE, £572;BP-NYSE, US$44.39) was given anew target price of £615 byDeutsche Bank and one of £610 byJefferies Financial. The latter alsolowered its target price for RoyalDutch Shell PLC ADR (RDSA-LSE,£2,481.50; RDS.A-NYSE, US$64.20)to £2950 from £3360 but kept it at“buy”. Dutch Antillean Schlum-berger Ltd. (SCL-LSE, £46.30; SLB-NYSE, US$45.56) at under US$46yields 4.38 per cent. It expects 2019capital expenses to fall in NorthAmerican upstream by about 10per cent hurting its productionarm. But SLB says exploration andproduction will grow in the NorthSea, the Middle East, Russia,Africa, and Latin America. “As oilprices rise, this will boost drilling.Also it does plenty of share buy-backs. I have owned SLB foreverand if the rating improves, I willbuy more,” Ms. Lewis claims.

The Investment Reporter, MPLCommunications, 133 RichmondSt. W., Toronto, ON M5H 3M8,(800) 804-8846, $337 a year.www.investmentreporter.com

One of editor Marc Johnson’sKey Stock is Shaw Communica-tions Inc. (SJR.B-TSX, $27.29; SJR-NYSE, US$20.40) - which did betterin the first half of fiscal 2019 (peri-od ending Feb. 2019). But he says itmay look to battle the entrenchedB i g T h r e e w i r e l e s s s e r v i c eproviders in Telus Corp., RogersCommunications Inc. and BCEInc. A good strong fight with the bigtelecom players provides opportu-nity but also raises risk. If you can

accept this risk, he says to “buy”Shaw for gains and attractive divi-dends. Calgary-based Shaw Com-munications did much better infirst six months to Feb. 28. It earnednet income of $341 million, or 66 cents a share. This was aturnaround from a net loss of $64million, or 13 cents a share, a yearearlier. Much higher cash flow con-firmed Shaw’s higher profits. In thefirst half of fiscal 2019, the compa-ny generated cash flow of $883 mil-lion. This was up sharply from cashflow of $318 million, a year earlier.Both Shaw’s Wireless and Wirelinesegments grew in the second quar-ter of fiscal 2019. The Wireless seg-ment added a net 65,000 postpaidsubscribers. This brought the Free-dom Mobile customer base tomore than 1.5 million by the end ofFebruary. Another positive devel-opment was higher revenue fromcustomers. Shaw’s average rev-enue (billing) per unit advanced by7.5 per cent to $41.34 a month. Atthe same time, Mr. Johnson saysgoing up against the Big Threewould prove costly as it needs toinvest in its business (i.e. market-ing and infrastructure). On Feb. 28,Shaw held cash of $1.288 billion.Subtract total debt of $5.346 billionand its net debt stands at $4.058billion. This was 2.2 times the cashflow of $1.804 billion over the threeprevious quarters. This, he says, isacceptable as the company gener-ates utility-like predictable and sta-ble cash flow. It expects free cashflow to hit $500 million this year. Inaddition, Shaw can sell its sub-sidiary asset, Corus EntertainmentInc. (CJR.B-TSX, $7.70) if the rightoffer comes along. In fiscal 2019,Shaw expects that its consolidatedincome before restructuring costsand amortization will grow bybetween four and six per cent.

Sh o r t t a k e s , p r o , c o n ,m a y b e : B o b C a r l s o n ’ sRetirement Watch has arecommendation that is

tied to U.S. infrastructure spend-ing. It is the Wasatch-HoisingtonU.S. Treasury Fund (WHOSX-MUTF, US$16.10). The fund ownsprimarily long-term U.S. Treasurybonds. The fund managers therebelieve the economy is weakerthan many realize. The fund willlose value if interest ratesincrease. Mr. Carlson agrees, and

also doesn’t believe there’s a highrisk of a lasting rise in interestrates. The fund declined 0.49 percent between January and Marchso now may be a good time tojump in.

Mind Over Markets, C/O InvestingDaily, 7600A Leesburg Pike, WestBuilding, Suite 300, Falls Church,VA 22043 U.S.A., (800) 832-2330.www.investingdaily.com/mind-over-markets

Analyst John Persinos takes alook at two pot stocks, tellingreaders whether or not theyshould invest in MedMen Enter-prises Inc. (MMEN-CSE, $4.03;MMNFF-OTC, US$3.02) or AphriaInc. (APHA-TSX, $10.25; APHA-NYSE, US$7.65). Exemplifying themainstreaming of Mary Jane iscannabis dispensary operatorMedMen. The company has great-ly expanded beyond its initialmarkets of California, Nevada,and New York. Upon the close ofvarious pending transactions andacquisitions, MedMen will have32 operational dispensaries, andlicenses for 19 factories across 12states. MedMen has 16 new loca-tions scheduled to open in 2019.All the while normalization ofmarijuana continues apace. InMarch 2019, the U.S. HouseFinancial Services Committee vot-ed to pass legislation that wouldmake it easier for marijuana busi-nesses to access banking services- though it is still federally illegal inthe U.S. Admittedly, operatingresults for the first and secondquarters of fiscal 2019 have shownhuge revenue growth, also withnet losses of -US$2.77 per share.However, as it reaps synergiesfrom vertical integration, the com-pany should soon start postingprofits. MedMen posted prelimi-nary results for its fiscal 2019 thirdquarter that are encouraging.Across the company’s operationsin California, Nevada, New York,Arizona and Illinois, revenuereached US$36.6 million, repre-senting a 22 per cent quarter-over-quarter increase over its fis-cal 2019 second quarter. “Med-Men just might realize its dreamof becoming the Whole Foods ofpot-buying. It’s a compellinggrowth story,” Mr. Persinos con-

cludes. Meanwhile, the Aphriastock got torpedoed in Dec. 2018,in the wake of a devastating short-seller report from QuintessentialCapital Management founderGabriel Grego. He called the stocka “black hole”. Aphria reportedoperating results that reveal agrowing sea of red ink too. For thethird quarter ending Feb. 28, 2019,the company posted revenue ofUS$73.6 million, an increase of 240per cent from the previous quarterand 617 per cent from 2018.Sounds impressive, right? Well, thecompany still reported a net loss ofUS$108 million versus last year’snet income of US$12 million forthe same time period. The compa-ny’s profit margin in the quarterstood at -30.9 per cent. Mr. Persi-nos calls it a “toxic investment” -one you should avoid.

Investment Executive Newspaper,37 Front St. E. Suite 200, Toronto,ON M5E 1B3, 416-847-5100.www.investmentexecutive.com

A pair of ETFs focused on U.S.-based cannabis companies — onefund actively managed, the otherpassive — is set to begin trading onNEO Exchange during mid April.E v o l v e F u n d s G r o u p I n c .announced it had filed its finalprospectus to launch the EvolveU.S. Marijuana ETF, an activelymanaged fund investing in the U.S.cannabis industry. Horizons ETFsManagement (Canada) Inc. issueda release announcing it had filed afinal prospectus for the HorizonsU.S. Marijuana Index ETF. Evolve’sETF will trade under the tickerUSMJ and invest in equity securi-ties of companies with businessactivities in the U.S. recreationaland/or medical cannabis industry.In its release, Evolve said “activemanagement is essential in theburgeoning cannabis space giventhe ongoing regulatory environ-ment and the significant volatilityof the cannabis sector.” Horizons’ETF will trade under the tickerHMUS (and HMUS.U in U.S. dollarunits) and provide unitholderswith exposure to an index of U.S.-based companies that serve as pro-ducers, developers or suppliers ofcannabis or hemp-based products.Unlike Canada, the U.S. hasn’tlegalized recreational or medicalcannabis, although a number ofindividual states have. Both Evolveand Horizons expressed optimismthat the U.S. cannabis industry willcontinue to grow. “We believethere are significant near-term cat-alysts that will cause the U.S. mar-ket to expand rapidly,” Raj Lala,president and CEO of Evolve, saidin a statement. “There are severallaws currently making their waythrough Congress that wouldexpand legalization of recreationalcannabis and give those compa-nies better access to banking andcapital.” In a statement, SteveHawkins, president and CEO ofHorizons ETFs, said “As the U.S.continues to further liberalize itsmarijuana regulations, we antici-pate that more investors will belooking to invest in companieswith significant business opera-tions in the U.S. market, andHMUS will provide a diversifiedand liquid way to gain that expo-sure in one ETF.”

Dow Theory Forecasts, 7412Calumet Ave., Hammond, IN46324-2692, U.S.A., (800)-233-5922, US$289 a year.www.dowtheory.com

Tandem DiabetesCare Inc. (TNDM-NASDAQ, US$54.41)looks like it has the

best insulin pump on themarket, and that markethas begun a major growthwave as technologicaladvancements are attract-ing many diabetics whoare tired of sticking them-selves with multiple injec-tions per day.

Tandem thinks just 28per cent of Type 1 diabeticsin the U.S. currently use anypump, but that could growto 50 per cent over time(about half of Tandem’susers are new to the pumpmarket, with the otherscoming from competingpumps). The company haspenetrated just a fraction ofits potential market, buteven that has caused rev-enues to explode (growth of60 per cent, 71 per cent and89 per cent over the pastthree quarters). Tandemhas pulled back sharply, butheld its 50-day line.

Another little-knownname that the advisory isenthused about is InVitaeCorp. (NVTA-NYSE,US$22.86). Thanks to yearsof heavy investments thatput all available geneticinformation onto one plat-form, the firm is now bring-ing genetic testing to themasses by driving downcosts (down 24 per cent lastyear alone). The days ofgenetic tests done on acase-by-case basis and cost-ing thousands are beingreplaced by more common-place testing (much of it inoncology, but the firm ismoving into reproductivehealth in a big way) for justhundreds of dollars.

Three years ago, Invi-tae’s platform processed59,000 tests, but that grewto 149,000 in 2017, 303,000last year, and managementis looking for 500,000 tests(likely conservative) thisyear, with revenue growtharound 50 per cent both thisyear and in 2020.

Both stocks are veryvolatile and NVTA is a bitthinly traded, too. Butchief analyst Michael Cin-tolo loves the potential ofeach—they’re on his watchlist, and you could startwith a half-sized positionuntil you see a good setupfor more.

LETTER OF THEWEEKE

ditor Bob Carlson notes that REITs are out-pacing the stock indexes, after introducingthem to his portfolio in early 2017 throughCohen & Steers Realty Shares Fund

(CSRSX-MUTF, US$66.99). It has returned 12.77per cent year-to-date (writing as of late March).Over 12 months, it returned 17.45 per cent. The topsectors in the fund were apartments (15 per cent),health care (12 per cent), data centres (11 per cent),offices (10 per cent), and industrial buildings (eightper cent). Top holdings were Welltower Inc.(WELL-NYSE, US$73.24) and UDR Inc. (UDR-NYSE, US$44.23), among others (45 in total).

Mr. Carlson adds that the year-to-date stockrally is global, and as such, he has benefitted fromowning another mutual fund in WCM FocusedInternational Growth Fund Investor Class

(WCMRX-MUTF, US$16.28). The managers ofthis fund own only a few stocks that they considerto be great companies with high and sustainablegrowth. They start by looking for companies withlittle or no debt, with high returns on capital.

He also likes global infrastructure stocks. Heowns these stocks through the closed-end fund,Cohen & Steers Infrastructure Fund Inc. (UTF-NYSE, US $23.98). It is up 20.37 per cent since theturn of the year (till late March).

The discount to net asset value is down to 5.67per cent, while the six-month average is 7.01 percent. The top-two sectors of this fund are electricutilities (28 per cent) and midstream pipelinecompanies (12 per cent), with Enbridge Inc.(ENB-TSX, $49.79; ENB-NYSE, US$37.18) beingone of his top picks.

INFRASTRUCTURE MUTUAL FUND HIGHLIGHTED

Bob Carlson’s Retirement Watch, P.O. Box 9009, Waldorf, MD 20604-9009, (800)-552-1152, US$99 a year. www.retirementwatch.com

Issue 9 / 19 I N V E S T O R ’ S D I G E S T May 10, 2019 / INDX1

3M 105, 483

58.com 218

A&W Revenue Royalties Income Fund 42ABB 175AbbVie 194ABcann Global 228, 286Absolute Software 102, 150, 364Acasti Pharma 125, 300Accenture PLC 107Acerus Pharmaceuticals 81, 170, 340Acreage Holdings 16Activision Blizzard 237, 417Adobe Systems 173, 305Advance Auto Parts 129, 261, 413, 525Advanced Disposal Services 525Advantage Oil & Gas 209, 366, 387Adventus Zinc 344AECOM 175Aecon Group 254, 367, 422, 483Aehr Test Systems 174AES 262, 395Aetna 151, 175Aflac 17, 219, 458Ag Growth International 99, 195, 258AGL Energy 283Agnico Eagle Mines 285, 409AGT Food and Ingredients 57Aimia 389Air Canada 307, 522Air Products & Chemicals 193AirBoss of America 257, 428Akita Drilling 455, 498Akumin 408, 417Alacer Gold 79, 213Alamos Gold 168Alaris Royalty 45, 145, 167, 187, 497Alaska Air Group 17, 19Alcanna 417, 524Alcoa 241Aldershot Resources 419Aleafia Health 9, 298, 408Alerian MLP ETF 238Alexion Pharmaceuticals 150Algold Resources 365Algonquin Power & Utilities 15, 140, 238, 439Alibaba Group Holding 150, 150, 218, 306,

326, 438Alimentation Couche-Tard 13, 23, 171,

394, 432Alio Gold 168, 169, 300, 477Allbanc Split Corp. II Class A

Capital Shares 67Allbanc Split Corp. II Class B Preferred

Shares Series 2 67Allegiant Gold 82, 324Allstate 194, 502Alphabet 18, 106, 129, 130, 135, 195, 217,

219, 239, 243, 349, 350, 417AltaGas 52, 145, 213, 275, 302, 410,

415, 482AltaGas Canada 37Altigen Communications 131Altria Group 150Altura Energy 57, 256, 392Altus Group 145Alvopetro Energy 278, 452Amarillo Gold 386Amazon.com 42, 106, 130, 135, 151, 194,

195, 243, 263, 306, 327, 349, 350, 371,417, 459, 463, 485

American Midstream Partners LP 351, 370American Outdoor Brands 174American WaterWorks Co. 194Americas Silver 171Amplify Transformational Data

Sharing ETF 526Anaconda Mining 172Andeavor 351Andrew Peller 52, 277Anglo American PLC 243AngloGold Ashanti 42, 151Anthem 151, 173APA Group 283Aphria 18, 59, 66, 208, 286, 309, 480Apollo Global Management LLC 62, 87Apple 17, 41, 89, 106, 153, 195, 218,

219, 237, 243, 263, 267, 285, 329, 374,399, 458

Applied Materials 415ARC Resources 78, 126, 230, 296Argonaut Gold 123ARHT Media 66Aritzia 346Arizona Mining 192, 282, 307Assure Holdings 415AT&T 42, 107, 218, 327, 371ATAC Resources 134, 285Athabasca Oil 169, 256, 499Atico Mining 212Atlantic Gold 22, 145, 145, 212, 344Atlantica Yield PLC 238Aurinia Pharmaceuticals 348, 516Aurion Resources 134Aurora Cannabis 18, 66, 78, 211, 286, 309,

360, 414, 441, 451Auryn Resources 214AutoCanada 390Autodesk 219, 393AutoHome 19, 263Automatic Data Processing 219Automotive Properties REIT 6, 182AutoZone 17Auxly Cannabis Group 54AvalonBay Communities 501Avante Logixx 143, 254, 428Aveda Transportation & Energy

Services 209Avista 266

Axion Ventures 101, 232, 272, 320Axis Auto Finance 190, 417Axon Enterprise 174, 211, 263Azure Power Global 239, 282, 482

B.O.S. Better Online Solutions 86, 106, 174B2Gold 480Badger Daylighting 43, 96, 120, 187, 188,

256, 347, 478Baidu 131, 218, 306, 326, 438, 483Ball 481Balmoral Resources 189Banco Santander S.A. 42Bank Montreal 65Bank of America 62, 151, 458Bank of Montreal 147, 276, 283, 287,

323, 405Bank of New York Mellon 85Bank of Nova Scotia 12, 42, 43, 65, 142,

154, 176, 287, 409, 459, 495, 526Bank of NY Mellon 18Baozun 131Barkerville Gold Mines 58, 391Barrick Gold 18, 59, 82, 120, 167, 213,

285, 527Bausch Health 437Baytex Energy 38, 301, 388BCE 125, 150, 451, 497Beazer Homes USA 457Becton Dickinson & Co. 194Bed Bath & Beyond 307Beleave 286Bellatrix Exploration 158, 164, 516Bellus Health 521Bengal Energy 302Best Buy Co. 149, 327, 413BeWhere Holdings 274BHP Billiton PLC 243Big Lots 263Bilibili Inc. ADR 395BioSig Technologies 239Birchcliff Energy 124, 256Bird Construction 13, 164, 365, 522Bird River Resources 177Black Diamond Group 233, 347, 454BlackBerry 9, 80, 169, 243, 323, 399,

452, 505Blackline Safety 98, 155, 185, 316, 453BlackPearl Resources 303, 478BlackRock 85Blackstone Group LP 19, 62, 87Bloom Energy 393Blueknight Energy Partners LP 370Bluestone Resources 103, 233BMO Aggregate Bond Index ETF 110BMO Covered Call Canadian

Banks ETF 363BMO Covered Call Utilities ETF 175BMO Dow Jones Industrial Average

Hedged-to-CAD Index ETF 99BMO Equal Weight Banks

Index ETF 110, 395BMO Equal Weight U.S. Banks Hedged-to-

CAD ETF 487BMO Equal Weight Utilities Index ETF 110,

373BMO India Equity Index ETF 133BMO Junior Oil INdex ETF 63BMO MSCI Emerging Markets Index ETF

133BMO S&P 500 ETF un-hedged

Canadian Dollar 110BMO S&P/TSX Capped Composite

Index ETF 110BMO S&P/TSX Equal Weight Banks

Index ETF 154BMO S&P/TSX Equal Weight Global Gold

Index ETF 255BMO S&P/TSX Global Base Metals

Hedged-to-CAD Index ETF 111BMO S&P/TSX Global Equal Weight Global

Base Metals Hedged-to-CAD IndexETF 35

BNK Petroleum 345Boardwalk REIT 182, 258Boeing 151, 173, 319Bombardier 37, 127, 189, 253, 319, 323,

422, 502Bonavista Energy 123, 387Bonterra Energy 81, 164, 494Bookfield Asset Management 67, 124Booking Holdings 42Boralex 8, 145, 364Boston Beer 149Boston Pizza Royalties Income Fund 490Boston Properties 105Boyd Group Income Fund 358BP PLC 239, 350Brick Brewing Co. 14, 208, 272, 411Bristol-Myers Squibb 61Broadcom 175, 267Broadway Financial Services 131Brookfield Asset Management 96, 232,

365, 454Brookfield Infrastructure Partners LP 107,

174, 301, 395, 527Brookfield Renewable Partners LP 238BRP 36, 42, 168, 258, 408BSM Technologies 40BSR REIT 490BTB REIT 226BTL Group 243Buckeye Partners LP 131, 415

Cabot Oil & Gas 237, 387CAE 120, 121, 150, 296, 516Calfrac Well Services 300Calian Group 278, 516Cameco 63, 100, 307, 344, 439, 450Camping World Holdings 149Canacol Energy 140, 147, 316

Canada Goose Holdings 124, 298, 519Canadian Apartment Properties REIT 446Canadian Imperial Bank of Commerce 3,

65, 154, 276, 283, 287Canadian National Railway 32, 81, 84,

101, 347, 503Canadian Natural Resources 63, 114, 131,

158, 202, 334, 378, 466Canadian Pacific Railway 106, 158, 290,

340, 455, 466, 479, 495Canadian REIT 175Canadian Tire 121, 127, 229Canadian Utilities 215, 343Canadian Western Bank 165, 287Canamex Gold 111Canfor 133, 142, 517Canfor Pulp Products 343Cannabis Wheaton Income 235CannaRoyalty 147, 300, 408Cannex Capital Holdings 318Canntab Therapeutics 155, 442CannTrust Holdings 53, 66, 272, 519Canopy Growth 18, 66, 128, 155, 210,

286, 309, 317, 414Canopy Rivers 56, 474CanWel Building Materials Group 146,

146, 433Capital Power 125, 497Capstone Mining 190Cardinal Resources 436Cardiome Pharma 189CareTrust REIT 61Cargojet 145, 165, 252, 389, 520Carvana 263Cascades 78Catamaran 151Caterpillar 483CBOE Volatility Index 175CCA Industries 174, 194CCL Industries 144, 146Celestica 103, 346, 475Celgene 527Cemex SAB de CV 174, 327Cemtrex 86, 219, 238Cenovus Energy 127, 188, 472Centene 41, 151Centerra Gold 84, 213Central Garden and Pet 17Centric Health 190, 433CenturyLink 371Cervus Equipment 255, 518CES Energy Solutions 102, 147, 299CF Industries Holdings 307CGI Group 60, 101, 151, 345, 422, 485Chakana Copper 134Charlotte’s Web Holdings 9Chartwell Retirement Residences 138Chemours 218, 351Chemtrade Logistics Income Fund 50,

314, 358Chesapeake Energy 458Chesswood Group 172Cheung Kong Infrastructure Holdings 283Chipotle Mexican Grill 130, 223Choice Properties REIT 19, 175CI Financial 231Ciena 63Cigna 151Cincinnati Financial 458Cineplex 32, 145, 385Cipher Pharmaceuticals 215, 384Cisco Systems 62, 393CIT Group 195, 239, 326, 458Citigroup 18Citizens Financial Group 307Clean TeQ Holding 219Clearwater Seafoods 145, 169, 365Clydesdale & Yorkshire Bank PLC 218Cobalt 27 Capital 130, 219Coca-Cola 129, 129, 243, 414Coeur Mining 369, 481Cogeco 145, 345Cogeco Communications 498Cognizant Technology Solutions 218, 351,

482Cohen & Steers Infrastructure Fund 63Colfax 393Colliers International Group 126, 229, 521Comcast 18, 218, 283, 327, 417, 459, 482Comerica 195, 239Command Security 174, 238, 439Commerce Resources 353Commercial Metals 218, 305Computer Modelling Group 120, 259Cona Resources 142Condor Petroleum 390Conifex Timber 258ConocoPhillips 62, 262, 369Consolidated Edison 219Constellation Brands 18, 85, 194, 394, 414Constellation Software 57, 106, 214, 323,

492Contact Gold 474Continental Gold 307Cooper Cos. 41Corby Spirit and Wine 147, 272, 322, 417Corning 194Correvio Pharma 58, 389, 477Cortex Business Solutions 13, 40, 477Corus Entertainment 174, 184, 276Corvus Gold 257Cosan 174Costco Wholesale 18, 481Coty 393CPS Technologies 62Crescent Point Energy 208, 434Crew Energy 39, 121CRH Medical 164, 169, 230, 362Crius Energy Trust 94Crombie REIT 226, 402Cronos Group 18, 34, 42, 66, 150, 168,

286, 412, 458Crown Capital Partners 148, 321CT REIT 94CubeSmart 149Cummins 219Currency Exchange International 166, 279,

302, 340, 435CVS Health 151, 167, 175, 307

D.R. Horton 131, 218, 326, 483Dalradian Resources 302Darden Restaurants 325, 457David’s Tea 305Deere 41Deere & Co. 261Delek Drilling 439Delek US Holdings 150, 262, 306Delphi Energy 170, 212, 319Delphi Technologies 130Delta 9 Cannabis 286Delta Air Lines 19, 483, 502Denison Mines 411, 453Descartes Systems Group 12, 280, 448Detour Gold 145, 212, 321Deutsche Bank AG 18, 307Devon Energy 62, 387DHX Media 124, 433Diamond Estates Wines & Spirits 141, 235,

299, 320, 404Diebold Nixdorf 415DIRTT Environmental Solutions 97, 165,

517Discover Financial Services 307Discovery Communications 481Distinct Infrastructure Group 279, 448Divestco 177DocuSign 151Dollar General 263, 413Dollar Tree 17, 173, 263, 325Dollarama 12, 184, 301Dominion Energy 151, 307, 438Dominion Energy Midstream Partners LP

151, 438Domtar 61, 101Double Line Floating Rate Class 1 Fund 63DoubleLine Emerging Markets Fixed Income

Fund Class I 131DoubleLine Emerging Markets Fixed Income

Fund Class N 131DoubleLine Floating Rate Fund 86DowDuPont 43Dream Industrial REIT 226Dream Unlimited 388Drone Delivery Canada 197, 505Duke Energy 131, 174Dundee Precious Metals 33, 122Dunkin’ Brands Group 129Dynacor Gold Mines 283Dynasil Corp. of America 62

Eagle Point Credit 439Eastmain Resources 274Eastman Chemical 133Echelon Financial Holdings 124, 387, 519ECN Capital 96, 252, 282, 455Ecopetrol SA 414, 502Edison International 283Eguana Technologies 370, 472Eldorado Gold 85, 185Electronic Arts 237Element Fleet Management 169, 430Emblem 209, 286, 518Emera 122, 321Emerita Resources 191Emmis Communications 326Empire Co. 33, 164, 165, 361, 452Enbridge 36, 124, 140, 150, 320, 351,

439, 503Enbridge Energy Management LLC 439Enbridge Energy Partners LP 439Enbridge Income Fund Holdings 439EnCana 63, 122, 228, 387, 453Endeavour Silver 57, 436, 198Enercare 395EnerDynamic Hybrid Technologies 370Enerflex 391Energean Oil & Gas PLC 306Energen 238Energold Drilling 109, 241Energy Fuels 63Energy Transfer Equity LP 415Energy Transfer Partners LP 370, 415Enerplus 114, 235, 378, 510Ensign Energy Services 13Entergy 218Enterprise Products Partners LP 131, 131,

415EnWave 412EOG Resources 62Equinox Gold 56Equitable Group 192Ero Copper 141, 231, 404, 429Eros International PLC 195Espial Group 126, 253, 367, 494Essential Energy Services 58, 368, 496ETFMG Alternative Harvest ETF 194, 459Evertz Technolgies 432Evertz Technologies 37, 168Excellon Resources 76, 165, 241, 434Exchange Income 114, 131, 341, 516Exco Technologies 77, 167EXFO 57, 479Express Scripts Holding Co. 151Extendicare 145, 174, 389Exterran 369Exxon Mobil 130, 350, 459

Facebook 42, 106, 130, 175, 195, 350,

370, 417, 485, 501Fairfax Financial Holdings 96, 340Falco Resources 303FedEx 41, 62, 305Fibria Celulose SA 150Fidelity Overseas Fund 218Fiera Capital 184Finning International 76, 252Firan Technology Group 120, 127, 208,

342, 478First Capital Realty 348, 516First Majestic Silver 246First Quantum Minerals 101, 243, 307First Solar 281First Trust Nasdaq Clean Edge Smart GRID

Infrastructure Index 526First Trust Natural Gas ETF 387

Five Below 281Flex 306Flexible Solutions International 43, 106Flower One Holdings 55Fluor 175Foot Locker 149, 502Ford Motor 219, 458Fortescue Metals Group 243Fortis 121, 174, 360, 476, 495Fortuna Silver Mines 147, 198, 344Fossil Group 223Founders Advantage Capital 210, 384, 448Franco-Nevada 495Franklin Resources 458Freehold Royalties 142, 257, 362Freeport-McMoRan 237, 349Freshii 124, 168, 521Frontera Energy 387FSD Pharma 155, 442Full House Resourts 527Future Farm Technologies 87

G4S PLC 370Galaxy Gaming 62, 131, 131, 262Gamehost 164, 257, 386Gartner 219GDI Integrated Facility Services 124, 146GDS Holdings 307Gear Energy 81, 124, 171, 231, 340General Electric 42, 107, 221, 327, 399, 439General Mills 193General Motors 61, 219, 370Genworth MI Canada 96, 492Geodrill 32, 388George Weston 19, 140, 144, 410Gibson Energy 212Gildan Activewear 144, 147, 499Global Water Resources 164Global X Funds Copper Miners ETF 35Global X Lithium & Battery Tech ETF 526Global X Lithium Battery ETF 63Global X Robotics & Artificial

Intelligence ETF 526Gluskin Sheff + Associates 452goeasy 37, 228, 363, 473Goldcorp 63, 81, 125, 214, 285Golden Dragon ETF 438Golden Predator Mining 287Golden Star Resources 213Goldman Sachs Group 62, 217, 283, 307Goodfood Market 125Gorman-Rupp 415GoverMedia Plus Canada 153Gran Tierra Energy 232Grande West Transportation Group 8, 184,

272, 299, 407Gratomic 373Great Bear Resources 134Green Organic Dutchman Holdings 18Green Thumb Industries 478GreenSpace Brands 100, 125, 155, 388, 417GrowMax 280GrubHub 105, 263, 349GSE Systems 18, 174GT Gold 56, 168, 498Guyana Goldfields 417, 495GW Pharmaceuticals 300, 325GW Pharmaceuticals PLC 66, 85

H&R Block 305, 437H2O Innovation 14, 124, 448Hamilton Thorne 260Hanover Insurance Group 175Hardwoods Distribution 164, 166, 367, 522Harley-Davidson 325Harris 319Hasbro 129, 149HCP REIT 61Hecla Mining 349Hemp 87Heroux-Devtek 99, 520HEXO Cannabis 66Hi-Crush Partners LP 61, 369High Liner Foods 123, 144, 215, 391, 417,

449, 520Hiku Brands Co. 142, 303Hill-Rom Holdings 86Hilton Worldwide Holdings 175HIVE Blockchain Technologies 171, 243,

257, 346, 456HollyFrontier 262, 502Hollysys Automation Technologies 439Home Capital Group 120Home Depot 41, 130, 194Horizon North Logistics 164, 168, 317,

450, 492Horizons Marijuana Life Sciences Index ETF

65, 194, 309Horizons S&P/TSX Capped Energy

Index ETF 63Horizons US Dollar Currency ETF 151HudBay Minerals 408Hudson’s Bay 191, 275Humana 129, 525Husky Energy 39, 76, 144, 345, 452Huya 371Hydro One 125, 167, 215, 266, 346, 434Hydropothecary 186, 321Hydrotherapy 414

Iamgold 79, 276iAnthus Capital Holdings 14, 57, 405, 419,

443IBM 42, 283IHS Markit 193Ikkuma Resources 32, 273, 392Imaflex 8, 216, 404Immunovaccine 233Impact Silver 2Imperial Metals 166Imperial Oil 347IMV 276, 448Indigo Books & Music 155, 302Indigo Books and Music 97, 428, 496Indiva 388Information Services 104

InfuSystem Holdings 306ING Groep NV 281Innergex Renewable Energy 126Inovalis REIT 270InPlay Oil 76, 168, 430Insignia Systems 150Intact Financial 103Integra Resources 168Intel 18, 86, 130, 175, 415Interfor 128, 133, 475, 493Interpace Diagnostics Group 395InterRent REIT 138, 490Intertape Polymer Group 97Intuit 173, 457INV Metals 243Invesco 86, 481Invesco DB Oil Fund 62Invesque 6, 138, 270, 402InZinc Mining 282iPath Bloomberg Copper Subindex Total

Return ETN 35IPL Plastics 15, 168, 343iQiyi 62, 131, 211, 326, 395, 438iRhythm Technologies 129, 149Iron Bridge Resources 170, 259, 450iShares 20+ Year Treasury Bond ETF 373iShares Brazil ETF 482iShares Canadian Short-Term Bond

Index ETF 110iShares Core Balanced ETF 174iShares Core Canadian Universe Bond

Index ETF 175iShares Core MSCI EAFE ETF 151iShares Core MSCI Emerging Markets

Index ETF 151iShares Core S&P 500 Index ETF 439iShares Core S&P 500 Index ETF CAD-

Hedged 110iShares Core S&P Small-Cap ETF 218iShares Core U.S. Aggregate Bond ETF 363iShares Emerging Markets Fund 438, 502iShares Floating Rate Index ETF 414iShares Minimum Volatility Emerging Markets

43iShares MSCI Emerging Markets Index ETF

307, 485iShares MSCI Global Metals & Mining

Producers ETF 35iShares Russell 2000 ETF 486iShares S&P GSCI Commodity-Indexed Trust

111iShares S&P/TSX 60 Index ETF 109, 151iShares S&P/TSX Canadian Preferred Share

Index ETF 175iShares S&P/TSX Capped Energy Index ETF

63, 110, 487iShares S&P/TSX Capped Financials

Index ETF 110iShares S&P/TSX Global Base Metals

Index ETF 35iShares S&P/TSX Global Gold Index ETF

110, 255, 486iShares U.S. Oil & Gas Exploration &

Production ETF 62iShares US Aerospace and Defense ETF 43Israeli Mobileye BV 130Iteris 62, 106, 238Ivanhoe Mines 452

Jadestone Energy 211Jaguar Mining 145, 155, 241Jamieson Wellness 144Japan Gold 453JD.com 42, 131, 218JinkoSolar Holding Co. 281John Bean 149Johnson & Johnson 150, 281, 459, 481Journey Energy 364, 496JP Morgan Alerian MLP ETF 42JP Morgan Chase & Co. 18, 307Just Energy Group 120, 127, 361

K-Bro Linen 318, 518K92 Mining 22, 199, 320Kansas City Southern Railway 19, 217, 394Kellogg 237, 501Kelt Exploration 256, 406Keurig Dr. Pepper 349Keyera 114, 128, 277Killam Apartment REIT 314, 446Kinaxis 43, 131, 143, 523Kinder Morgan 86, 150, 219, 283Kinder Morgan Canada 155, 219, 277, 409Kinross Gold 126, 188, 451Kirkland Lake Gold 22, 36, 121, 236,

307, 493KLA-Tencor 415Klondex Mines 170KLX Energy Services Holdings 218Kneat.com 82Knight Therapeutics 59, 234, 455Knight-Swift Transportation Holdings 218,

326, 483Koss 79, 86KP Tissue 384Kraft Heinz 62Kraken Robotics 59, 474Kroger 18, 325, 437

L Brands 193Lam Research 131, 415Lantronix 86, 439Laurentian Bank of Canada 13, 99, 287Leagold Mining 59Lear 394Leatt 43, 502LendingTree 175Leon’s Furniture 364, 520Leucrotta Exploration 210, 246, 378, 510LexinFintech Holdings 174Liberated Syndication 395LightPath Technologies 351Linamar 169, 453Liquor Stores N.A. 155, 230Lithium Americas 499Loblaw Cos. 8, 19, 366

12 - MONTH COMPANIES INDEX (MAY 2018 - APRIL 2019)

This index covers the previous 12-month period to thecurrent date.Bold-faced page numbers refer to 2019 issues, while all other page numbers refer to issues published in 2018.

INDX2 / May 10, 2019 I N V E S T O R ’ S D I G E S T Issue 9 / 19

Lockheed Martin 62, 194Lowe’s Cos. 130LRAD 43, 414, 483Lululemon Athletica 106, 413Lumina Gold 243Lundin Gold 243Lundin Mining 169, 278, 432

Macro Enterprises 155, 213, 298, 384, 410Macy’s 307, 327, 502Magna International 238, 370, 394, 435Mainstreet Equity 35, 363Major Drilling Group International 298MamaMancini’s Holdings 526Mandalay Resources 345Manhattan Bridge Capital 106, 306Manulife Financial 143, 175, 235, 343Maple Leaf Foods 10Marathon Petroleum 18, 86, 351, 483Maricann Group 286Markel 129, 243Marquee Energy 213, 408Martin Marietta Materials 175, 371, 503Martinrea International 148Mason Graphite 521MasterCard 506Materialise NV 107Mattel 195MAV Beauty Brands 77, 341, 353Maverix Metals 212, 476Maxar Technologies 140, 301, 472, 494, 520McCoy Global 384McDonald’s 149Med MedReleaf 286Mediagrif Interactive Technologies 125,

297Medicure 12, 100, 230, 404MedMen Enterprises 443MedReleaf 236, 316Medtronic 261MEG Energy 80, 125, 257, 476Mercer International 256, 481Methanex 13, 100, 255, 432Metro 23, 103, 219, 386Michael Kors 437Micron Technology 173, 415Microsoft 105, 106, 130, 193, 194, 374,

394, 459, 485Midas Gold 37Mitel Networks 235Mogo Finance Technology 184Molina Healthcare 175Molson Coors Brewing 129, 414Mondelez International 105Morgan Chase & Co. 459Morgan Stanley 307Morneau Shepell 34Mosaic 129, 174Mosaic Co. 151Motorola 393Motorola Solutions 155Mountain Province Diamonds 411Movado Group 263MTY Food Group 120, 124, 344, 475Mullen Group 123, 300

NanoXplore 320National Bank of Canada 65, 276, 287, 506Navios Maritime Midstream Partners LP 370Nemaska Lithium 147, 319, 455Neo Lithium 36Neo Performance Materials 36, 52, 228, 454Netflix 131, 195, 217, 239, 399, 417NeuLion 188Nevada Gold & Casinos 439, 527Nevsun Resources 409New Flyer Industries 189, 252New Gold 125, 341New Jersey Mining 177New Look Vision Group 166, 521New Oriental Education & Technology Group

351Newcrest Mining 243Newmont Mining 63Nexa Resources SA 321, 450NexGen Energy 38, 307NextEra Energy 150Nexus REIT 138, 270NFI Group 39, 435NGL Energy Partners LP 351Nickel PJSC 130Nielsen Holdings PLC 217Nighthawk Gold 166Nike 173, 325, 457Nintendo Co. Ltd. ADR 150NIO 526

Noble Energy 306, 307, 439Nokia 61, 327Nokia Oyj 87Norbord 232Noront Resources 297North American Construction Group 146,

234, 431North American Energy Partners 155North West Co. 76, 167, 169, 296, 434Northland Power 101, 123, 439Northrop Grumman 62Northview Apartment REIT 138Nouveau Monde Graphite 517Nova Leap Health 11Nova Life Style 86Nucor 502Nutrien 54, 172, 174, 234, 239, 367, 496NuVista Energy 120, 135, 158, 202, 334, 431Nvidia 130, 153

ObsEva SA 305Obsidian Energy 58, 164, 278, 394, 523OceanaGold 22, 477OcianaGold 80Omnicom Group 129ON Semiconductor 63, 415ONE Hospitality Group 106Onex 133Open Text 100, 279, 433Orca Gold 276Orezone Gold 479Organigram Holdings 34, 141, 286Organovo Holdings 107Orla Mining 407Osisko Mining 171, 344Otis Gold 155, 364Overstock.com 195

Packaging Corp. of America 194Painted Pony Energy 59, 141Palo Alto Networks 85Pan American Silver 198, 241, 522Pan Orient Energy 252Paramount Resources 259Parex Resources 233, 307, 344Park Lawn 38, 191, 317Parkland Fuel 19, 87, 415, 451Partners Value Investments LP 67Partners Value Split Corp. Class AA Preferred

Shares Series 6 67Party City Holdco 173Pason Systems 43, 140, 362, 499Pattern Energy Group 10, 123, 142PBF Energy 150Pembina Pipeline 52, 96, 213, 228, 275,

415, 439, 454, 503Pengrowth Energy 158, 234, 321People 54, 208, 322PepsiCo 173Performance Food Group 63Petrobras Brazil ADR 502Petroleo Brasileiro SA 482Petrus Resources 55Peyto Exploration & Development 2, 326,

387, 394, 496PFB 148, 342Pfizer 105PG&E 307Philip Morris International 371Phivida Holdings 374Pinnacle Renewable Energy 140Pinnacle Renewable Holdings 141, 300Planet 13 Holdings 12, 429, 442Planet Fitness 151Point Loma Resources 296Pollard Banknote 58, 253, 448PotlatchDeltic 133Power Americas Minerals 329Power Corporation of Canada 238Prairie Provident Resources 98, 191, 273,

411, 477PrairieSky Royalty 63, 140PrairiSky Royalty 492Precision Drilling 77Premier Gold Mines 80Premium Brands Holdings 102, 186, 524Pretium Resources 76, 318Primo Water 173, 525PRO REIT 50Pro Shares S&P 500 Dividend

Aristrocrats ETF 439Probe Metals 320Procter & Gamble 106Profound Medical 147ProMetic Life Sciences 189ProntoForms 101, 168, 277

Protech Home Medical 121Prudential Financial 502Pulse Oil 32Pulse Seismic 80, 140, 360, 497PulteGroup 371, 502Pure Gold Mining 453Pure Multi-Family REIT 182Pure Storage 525Purpose Marijuana Opportunities Fund 55Purpose Premium Yield Fund 55

Qualcomm 267Quanta Services 371Quantum Minerals 131Quarterhill 391Quebecor 171, 238Quest Diagnostics 129Questor Technology 56, 188, 277, 360,

503, 521Quorum Information Technologies 38

RA Pharmaceuticals 41RADA Electronic Industries 43, 174,

175, 306Raging River Exploration 114, 297Ralph Lauren 261, 263, 501Randgold Resources 18Raytheon 62Real Matters 12Reaves Utility Income Fund 86Recipe Unlimited 166, 387RediShred Capital 100, 186, 299, 385, 472Redline Communications Group 521Reliq Health Technologies 323, 492Renaissance Gold 107Repro Med Systems 86, 306, 439Resolute Forest Products 32, 347, 500Restaurant Brands International 123, 124,

125, 215, 475Revival Gold 276, 433Rifco 404Rio2 321Ritchie Bros Auctioneers 369Ritchie Bros. Auctioneers 149Riverview Bancorp 350Roche Holding AG 144Rocky Mountain Dealerships 279Rogers Communications 103, 150, 346,

351Rogers Sugar 213, 275Roots 211, 303, 432Roxgold 80, 307, 476Royal Bank of Canada 14, 19, 65, 143,

167, 194, 239, 259, 276, 287Royal Caribbean Cruises 151, 350Royal Gold 437Royal Nickel 130Rubicon Minerals 11, 39Russel Metals 15, 135, 391RYB Education Inc. ADR 351

S&P Global 194, 458salesforce.com 17, 413, 457Sangoma Technologies 60, 87, 259, 388,

428Sanmina 131Saputo 283Savaria 42, 127, 143, 520Saville Resources 91, 353SCANA 151, 307Scandium International Mining 282Schmitt Industries 174Scotia Canadian Dividend Fund 194Scott’s Miracle-Gro 66SeaChange International 174, 503Sears Holdings 218Secure Energy Services 435SEMAFO 57Sempra Energy 174, 283, 327Seven Generations Energy 63, 81, 202Shares Commodities Select Strategy ETF

42Shaw Communications 83, 316ShawCor 83, 144, 456Shelco Holdings 126Shopify 106, 123, 127, 130, 175, 229, 389,

499Sienna Senior Living 8, 174, 368Sierra Wireless 143Signature Bank 217SilverCrest Metals 22, 55, 83, 189, 277,

451Singing Machine 526Singing Machine Co. 131SiriusXM 369

Siyata Mobile 233, 410Skechers USA 175Skeena Resources 134Sky PLC 218Sleep Country Canada Holdings 363SmartCentres REIT 94, 402Smith-Midland 62SNC-Lavalin Group 144, 169, 228, 351,

366, 473Sociedad Quimica y Minera de Chile 174,

239Socket Mobile 62Solar Alliance Energy 370SolGold PLC 243Source Energy Services 275, 474South32 282Southcross Energy Partners LP 351, 370Southwest Airlines 86, 151Southwest Gas Holdings 527SPDR Communication Services Select

Sector Fund 417, 527SPDR Consumer Descretionary Select

Sector Fund 417SPDR Consumer Discretionary Select

Sector Fund 374, 527SPDR Consumer Staples Select Sector

Fund 373, 431SPDR Energy Select Sector ETF 350SPDR Energy Select Sector Fund 527SPDR Financial Select Sector Fund 527SPDR Health Care Select Sector Fund 527SPDR Materials Select Sector Fund 527SPDR Portfolio S&P 500 High Dividend ETF

151SPDR S&P 500 ETF 110, 350SPDR S&P 500 ETF Trust 175, 502SPDR S&P Bank ETF 374SPDR S&P Insurance ETF 374SPDR Technology Select Sector ETF 485SPDR Technology Select Sector Fund

374, 417, 431SPDR Utilities Select Sector Fund 373Spectra Energy Partners LP 131, 150, 439Spin Master 169, 171, 195, 495Spirit Airlines 85, 525Splunk 149, 261Square 263SRG Graphite 319SSR Mining 22, 188, 241, 301, 476Stantec 140, 146, 213, 365, 496Starbucks 305Starlight Global Infrastructure Fund 438Starlight Investments Capital LP 438Stealth BioTherapeutics 173Stelco Holdings 135Stella-Jones 164, 171, 273, 411, 493STEP Energy Services 33, 190, 360, 479,

503Stingray Group 53StorageVault Canada 8, 98, 144, 254STORE Capital 130Storm Resources 145, 390Strad Energy Services 449Stratabound Resources 285Stratasys 107Strongco 168Stuart Olson 100, 167Sturm Ruger & Co. 174Summit Industrial Income REIT 6, 50, 314Summit Midstream Partners LP 370Sun Life Financial 45, 126, 255, 384Sun Metals 134Suncor Energy 26, 107, 114, 135, 169,

303, 334, 466, 503Sunniva 345Sunoco LP 370, 415SunPower 437Sunworks 86Superior Gold 16, 155, 187, 241, 276Superior Plus 79, 351Supernus Pharmaceuticals 86SuperValu 349Supreme Cannabis Co. 144, 272, 286Supremex 127, 232, 473Surge Energy 80, 164, 171, 364, 497Suzano Papel e Celulose SA 150Sylogist 82, 371, 494Symbility Solutions 208, 407Synchrony Financial 414Synopsis 219

T. Rowe Price Group 458TAG Oil 146, 316Tahoe Resources 233, 408Taitron Components 174, 263TAL Education Group 62, 150

TAL Education Group ADR 351Tamarack Valley Energy 114, 185, 432Target 18, 327TCF Financial 105Teck Resources 11, 125, 210, 433Tecsys 127, 169, 345, 435Telefonaktiebolaget LM Ericsson 87Telefonica SA 327Telus 122, 128, 150, 362Tencent Holdings 130, 150, 370, 459Terra Firma Capital 189, 409TerraForm Power 238, 327Tervita 385Tesco PLC 459Tesla 130, 219, 243, 397, 438, 457, 485Tetra Tech 175Teva Pharmaceuticals Industries 106Texas Roadhouse 123, 149TFI International 13, 122, 184The BMO Equal Weight Banks

Index ETF 486The Gap 393The Green Organic Dutchman Holdings 66The Hershey Co. 194, 501The Singing Machine Co. 106Theratechnologies 56, 144, 316theScore 37, 187, 322, 472Thomson Reuters 35, 406Thor Industries 282Tidewater Midstream and Infrastructure

246, 452Tiffany & Co. 263, 307Tiffany and Co. 413Tilray 42, 66, 458Timbercreek Financial 476Time Warner 218Titanium Transportation Group 170, 256,

367, 496TiVo 526TMX Group 36Toachi Mining 219TORC Oil & Gas 145Torex Gold Resources 306Toromont Industries 342Toronto-Dominion Bank 15, 19, 45, 65,

124, 144, 257, 276, 287, 327, 415Total Energy Services 386Touquoise Hill Resources 497Tourmaline Oil 2, 63, 83, 120, 158Toyota Motor 219, 501TransAlta Renewables 170Transat AT 37, 167, 322, 432TransCanada 351, 503TransCanada Pipelines LP 174, 415Transcontinental 39, 130, 140, 394, 451Travali Mining 171Tree Island Steel 147, 232, 500TRI Pointe Group 325TripAdvisor 223Trisura Group 144Troilus Gold 320, 477Trulieve Cannabis 78TSS 174TVA Group 498Twitter 417Tyson Foods 502

U.S. Foods Holding 173U.S. Global Jets ETF 19Ubisoft Enertainment SA 174UGE International 370UGI 63ULTA Beauty 173Under Armour 223Uni-Select 126, 188, 389Unisync 170United Continental Holdings 502United States Natural Gas Fund LP 111United States Oil Fund LP 62United Technologies 43United Therapeutics 193UnitedHealth Group 106, 175Uniti Group 238Universal Electronics 526Urbana 111US Auto Parts Network 174, 283US Steel 281USA Compression Partners 415USA Compression Partners LP 370Utilities Select SPDR 43

Vale SA 130, 174Valeant Pharmaceuticals International 195,

221Valens GroWorks 56, 142, 431VanEck Vectors BDC Income ETF 238VanEck Vectors Mortgage REIT ETF 238Vanguard Balanced Portfolio ETF 407, 519

Vanguard Canadian Aggregate Bond Index ETF 110

Vanguard Conservative Portfolio ETF 407,519

Vanguard Dividend Appreciation ETF 151Vanguard Growth Portfolio ETF 407, 519Vanguard Health Care ETF 371Vanguard High Dividend Yield ETF 503Vanguard International Growth 218Vanguard Short-Term Bond Index ETF 414Vanguard Strategic Small-Cap Equity 218Vanguard Total Bond Market 459Vanguard Treasury Money Market 131Vanguard Treasury Money Market Fund 86Vanguard U.S. Total Market Index ETF 363Vecima Networks 453Vectren 218Velocity Minerals 134Verizon 343Verizon Communications 86, 438Vermilion Energy 12, 135, 187, 214, 430,

510VersaBank 143, 279, 404, 526VersaPay 155, 191, 360Vertex Resource Group 523Vertix Resource Group 79Vicon Industries 219, 238Victoria Gold 155, 285, 428VieMed Healthcare 169, 212, 449Village Farms International 52, 143, 405Virgin Money Holdings PLC 218VirTra 62, 174Visa 135, 167, 194Vista Outdoor 174Visteon 149Vistra Energy 262Vivendi SA 174VIVO Cannabis 11, 406Vodafone Group PLC 143Vodafone Group PLC ADR 150Volkswagen AG 150Vornado Realty 173

Wajax 216Walgreens Boots Alliance 18, 42Walmart 18, 261, 457Walt Disney 369, 417Waste Connections 124, 140, 232, 492WCM Focused International Growth Fund

63WEC Energy Group 194WeedMD 373, 409WELL Health Technologies 11Wendy’s 149, 437Wesdome Gold Mines 22, 81, 144, 172,

241, 296, 428, 477West Fraser Timber 122, 340, 475West Fraser Timber Co. 120, 133, 497Western Energy Services 122, 364Western Forest Products 123, 125, 296, 520Westhaven Ventures 134WestJet Airlines 26, 99, 254, 361, 523Westport Fuel Systems 219Westshore Terminals Investment 168Weyerhaeuser 133Wheaton Precious Metals 301Whirlpool 281White Gold 285Whitecap Resources 26, 114, 260Williams-Sonoma 413Windstream Holdings 238Winnebago Industries 282Winpak 141Workday 175World Class Extractions 153WPT Industrial REIT 138, 446WSP Global 53, 166, 257, 365Wyndham Worldwide 261Wynn Resorts 525

Xcel Energy 150Xebec Adsorption 10, 165Xerox 327XPEL 175XPO Logistics 237

Yamana Gold 83, 233, 365Yangarra Resources 103, 120, 252, 307, 429Yelp 129Yum! Brands 501

ZCL Composites 35, 389Zillow Group 263Zimtu Capital 91ZTO Express 307Zymeworks 52, 409

Issue Date PagesMay 11, 2018 177-196May 25, 2018 197-220June 8, 2018 221-240June 22, 2018 241-264July 6, 2018 265-284July 20, 2018 285-308Aug. 10, 2018 309-328Aug. 24, 2018 329-352Sept. 7, 2018 353-372Sept. 21, 2018 373-396Oct. 5, 2018 397-416Oct. 19, 2018 417-440

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Issue Date PagesNov. 2, 2018 441-460Nov. 23, 2018 461-484Dec. 7, 2018 485-504Dec. 21, 2018 505-528Jan. 4, 2019 1-20Jan. 25 21-44Feb. 8, 2019 45-64Feb. 22, 2019 65-88March 8, 2019 89-108March 22, 2019 109-132April 5, 2019 133-152April 26, 2019 153-176