15 Jun 2021

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Anthony Menard

Number Cruncher Extra – Stella-Jones, Alimentation Couche-Tard & Metro

15 Jun 2021

In our last Number Cruncher we looked for stocks that don’t attract attention. We managed to find Stella-Jones (SJ), Alimentation Couche-Tard (ATD.B) and Metro (MRU) as potential candidates. In Number Cruncher extras, we use our software Stockpointer to reveal more insights about our picks.

Let’s start with SJ

SJ is identified by our system as a quality stock. The company has achieved stable return on capital with a large spread between its return on capital and cost of capital. The company also generated meaningful growth as sales and EPS grew by 16.4% and 10.3% respectively in the last 5-year.

 

The company still trades around the same price then 5 years ago despite higher EPS impliying a cheaper valuation. While the slowdown in the share price could be rational as the lumber prices should come back to earth, the share price stagnation over this period of time is surprizing considering the performance of the company.

 

ATD.B is also identified as a quality company by our software. The small momentum score reflects the hard start to the year as mentionned in the Number Cruncher. Sales are heavily down year-over-year, but the EPS accelerated to 34.4% compared to its 5-year trend of 25.9%. The lower sales came from lower gasoline revenues, but the margin improvements mitigated the lower gasoline volume.

 

The company NOPAT and EVA improved significantly in the last year. The share price seems to have trouble passing the $45 mark. The market is cautious with oil-related companies. ESG investments are increasingly popular potentially putting pressure on energy-focused companies. The recent green bond issuance combined with the last year great performance could help the stock to go beyond $45.

 

 

Metro has a similar profile than ATD.B, a great company with long-term growth, a decent valuation, but with poor momentum. Sales grew below its 5-trend, but the long-term trend incorporates the acquisition of Jean Coutu, a well-known drugstore in Quebec. The beta of 0.14 combined with its low risk score of around 20 demonstrates how little volatile the company is.

 

if we compare the performance and risk score to peers, the company seems to be a solid pick in terms of both performance and risk.

 

If you have any questions about the article, feel free to contact Anthony :
Amenard@Inovestor.com

If you would like to sign up for a free trial and learn how Inovestor can benefit you, contact Olivier:
Olamothe@Inovestor.com

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