KeyStone’s Stock Talk Show, Episode 184
Great to be with you. Ryan is back from my analyst conference in LA and we are on the precipice of our Fall Webinars on Wednesday and in-person VIP seminars this weekend in Vancouver & Calgary. We kick of the special show with a brief discussion on Legendary US Stock Jock Jim Cramer’s Mea Culpa regarding his BUY recommendation on Meta (FB:NASDAQ) (FaceBook) which has not worked out so well.
This week, we initiate a new feature interviewing top management teams of solid Canadian & US growth and dividend growth stocks. We expect to interview one per month moving forward. This month, we welcome, René Goehrum, President and CEO of TSX-Venture BioSyent Inc. (RX:TSX-V), a profitable growth-oriented specialty pharmaceutical company focused on in-licensing or acquiring innovative pharmaceutical and other healthcare products primarily for the Canadian market. The interview is quite extensive, and we hope you enjoy the format. Our Star of the Week is Hammond Power Solutions Inc. (HPS.A:TSX), which should be no stranger to clients having been a Focus Buy in our Canadian Small-Cap Growth Stock Coverage for a number of years. The company enables electrification through its broad range of dry-type transformers, power quality products and related magnetics. Hammond serves the oil and gas, mining, steel, waste and water treatment, commercial construction, data centers, EV charging, energy storage, solar, and wind power generation industries. The stock jumped 20% in the past 2 days and is up 67% in 2022 powered by record Q3 and year-to-date numbers. We let you know why.
I welcome my cohosts – Aaron, and the Killer B’s – Brennan & Brett.
Cramer’s Meta Clip
https://twitter.com/buccocapital/status/1585668254076370952?s=43&t=BBKPMMn75i1uXUccHQO6Fw
I made a mistake, and I was wrong – I trusted this management team and not myself and I was wrong?
As far as I understand, management stated that the Metaverse was a 10 year or 10 plus year venture. The company had a weaker than expected quarter (without a doubt) but it has been trending poorly financially for several quarters. If his thesis was based on this quarter his analysis was negligent at the very least or just lacked the depth and thought process to be taken seriously. Any buy thesis on Meta since the major plans in reference to the Metaverse, would have to be a belief in the long-term vison of said Metaverse, including significant near-term pain. Changing your opinion now suggests you had no real thesis or it was based on very, very cursory analysis. It looks bad and shedding a tear over it, seemed like a deflection of the poor analysis rather than a sincere expression of sympathy.
“Canadians have never felt worse about their finances, poll shows”
Hammond Power Solutions Inc. (HPS.A:TSX)
Price: $20.50
Market Cap: $241.43 billion
Dividend: 2.03%
Company Description:
With a history that dates back over 100 years, Hammond Power enables electrification through its broad range of dry-type transformers, power quality products and related magnetics. The company’s standard and custom-designed products are essential and ubiquitous in electrical distribution networks through an extensive range of end-user applications. Hammond serves the oil and gas, mining, steel, waste and water treatment, commercial construction, data centers, EV charging, energy storage, solar, and wind power generation industries.
Q3 2023
- Sales increased 56% to a record $149 million
- Earnings per share increased to $0.97, compared with $0.34 in Q3 2021
- Order backlog increased 141%.
- Cash generated from operations of $16.5 million and ending net operating cash balance of $21.84 million.
The numbers were great across the board – as costs stabilized, margins recovered from the second quarter. Historically high production volumes are having a positive impact on margins,
Hammond continues to experience a very favourable environment where sales from all business regions continue to grow at the highest rate in the company’s history. Given the momentum and the number of opportunities management see around the business, Hammond announced they are prudently moving ahead with selective and increased capital spending plans to expand our manufacturing capacity and service capabilities.
Conclusion:
Cash position and balance sheet have continued to strengthen over the first nine months of 2022 (gone from net debt to significant net cash position), providing a solid foundation to grow organically and through acquisition into 2023 and beyond.
The stock is up 67% year-to-date and 20% in the last 2 days – despite this, it will likely earn North of $3.00 per share in 2022, giving the stock a PE of well under 7. The gains this week and year-to-date, make it our Star of the Week.
