Posts tagged ‘investment ideas’

Sep 10

Some Cheap Canadian Stocks (PART I)

I’ve been finding bargains harder to come by. Six months ago I was finding it almost too easy to come up stocks that were worthy of consideration. The problem then was more one of pruning. Now it seems like the stocks I find all have a bit of hair.

Rather than venturing further afar to find ideas, I’ve been looking closer to home. I have mostly ignored the Canadian market over the last year and a half. I found a couple of special situations, like Yellow Media and Extendicare, but for the most part the opportunities in the US were more compelling. But that has changed. Over the last couple of months I have been finding and adding more Canadian stocks to my portfolio. I’ve already had some good luck with the endeavour, as both Novus Energy and Ainsworth Lumber received takeover offers in the last few weeks. In the next two posts I am going to talk about some of the names I’ve been adding in my portfolio. In this one I’m going to talk again about Axia, and introduce Vecima Networks.

Axia NetMedia (AXX.to)

Axia is a stock I’ve written about on a couple of occasions (here) and lately I’ve been adding to my position in whenever it has dipped to $1.90. A major overhang has been lifted. When I wrote my last post on Axia, I highlighted the renewal of the Alberta Supernet contract in June of 2015 as my one major area of concern. Axia removed that concern last week when they announced an extension of the contract to 2018. Read more

Jan 2

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Arkansas Best: The Upside of Union Negotiations

Arkansas Best is my second foray into the trucking world. Its discovery I owe to @Largcaptrader1 on twitter, who pointed out to me that the company may be a better way to play the industry than YRC Worldwide.

This is a much simpler investment idea than YRC Worldwide. While it took me weeks to wrap my head around all of the debt, liabilities and history of YRC Worldwide, it took me a couple days to get to the core of Arkansas Best.

But that isn’t to say that this is an easy win. The issue with Arkansas Best is singular, but it’s outcome is not easily determined. Just how well the investment plays out depends almost entirely on the outcome of negotiations with the Teamster union for the soon to be expired workers contract.

A bit of Background

Arkansas Best is a less-than-load trucker, very much a competitor of YRC Worldwide (which I wrote about the other day). Like YRC Worldwide, Arkansas Best is burdened by high costs relative to their competitors due to the high level of union employees. However unlike YRC Worldwide, Arkansas Best has been able to get by and be very marginally profitable without modifications to their employee contracts. They have an efficient operation that is mostly cash positive of an operating basis and that appears to be close to cash neutral after considering CAPEX requirements. They have far less debt than YRC Worldwide ($195 million versus 1.4 billion) and the company trades at a discount to book value ($11.55). Read more