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Dave Beaton, of Just Hockey Source for Sports in Toronto, holds two of the Bauer hockey sticks that have been recalled. (Kevin Van Paassen/Kevin Van Paassen/The Globe and Mail)
Dave Beaton, of Just Hockey Source for Sports in Toronto, holds two of the Bauer hockey sticks that have been recalled. (Kevin Van Paassen/Kevin Van Paassen/The Globe and Mail)

Eye on Equities

Bauer post-IPO share slide won't stick around: RBC Add to ...

The start of the NHL playoffs hasn't done much to ignite investor interest in Bauer Performance Sports Ltd. , which premiered on the TSX last month with its $75-million initial public offering.

The stock has been choppily trading below its $7.50 per share IPO price since its debut on March 11, and last Monday sank below $7 for the first time.

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Despite the less-than-enthusiastic welcome, RBC Dominion Securities Inc. analyst Tal Woolley has initiated coverage of the stock with an "outperform" rating, seeing significant upside as the leading global manufacturer of hockey equipment seasons as a public company.

Bauer is the No. 1 global hockey brand with a 45 per cent market share, and is now looking to expand its reach in new sports, including roller hockey and lacrosse.

This dominant position in hockey, in Mr. Woolley's view, offers a stable financial foundation to increase the business. Bauer has "developed an integrated research and development, supply chain and marketing platform that can be leveraged into new businesses," he notes.

He thinks Bauer can generate mid-single to low-double-digit revenue growth through a combination of share gains in hockey and new markets, with potential to improve margins and its sales leverage. "Upside opportunities for BAU include the outlicensing of existing dormant brands, and the acquisition of new IP (Intellectual Property) licenses or brands," he said.

The company's debt could constrain pursuit of growth opportunities, but can be sufficiently serviced by free cash flow, Mr. Woolley contends.

Upside: Mr. Woolley set a $9 price target.

"Clearer skies are now on the horizon" for Methanex Corp. , declared Raymond James Ltd. analyst Steve Hansen, who's encouraged by a surprisingly resilient market for methanol and the company's recent success in starting shipments from its Egyptian plant. While first-quarter results are likely to be "lacklustre," this is largely baked into the stock price and the outlook for the methanol market is strong, he said.

Upside: Mr. Hansen raised his price target by $6 (U.S.) to $40.

Related: Is Methanex next for Buffett?

Related: Rising demand for methanol puts focus on Methanex

Jennings Research Inc. analyst Russell Stanley is feeling bullish on Cline Mining Corp. after completing a tour of the company's New Elk coal mine in Colorado. The mine is "clearly ramping up production" and Mr. Stanley raised his forecast for metallurgical coal prices to reflect robust market conditions. He calls Cline Mining "an attractively valued producing pureplay on metallurgical coal, with significant production growth potential."

Upside: Mr. Stanley raised his 12-month target by $1 to $6.50 a share and rates the stock as a "speculative buy."

Last week's selloff in Semafo Inc. was overdone as investors worried that the political unrest in Burkina Faso would cause disruptions to the company's Mana mine, said Desjardins Securities Inc. analyst Brian Christie. Production is continuing and the president of the country appears to be acting quickly to stem further violence. "The currently depressed price of SMF shares represents a strong buying opportunity," he said.

Upside: Mr. Christie has a price target of $15.25 on the stock.

Related contentRelated: Gold producer Semafo seen vulnerable to a takeover



Saputo Inc. should be able to "comfortably" grow earnings per share in the double digits over the next few years, pushing its stock price higher, said TD Newcrest analyst Michael Van Aelst. He's encouraged by the cheese industry's robust fundamentals and pricing trends, as well as Saputo's clean balance sheet and strong free cash flow.

Upside: TD Newcrest raised its 12-month target price by $3 to $49.

Related: Saputo acquires U.S. cheese company



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Follow Darcy Keith on Twitter for more of the latest analyst actions from the Street and exclusive investing news from the Globe and Mail

Follow on Twitter: @eyeonequities

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