On today's TSX Breakouts report, there are 31 stocks on the positive breakouts list (stocks with positive price momentum), and 20 stocks are on the negative breakouts list (stocks with negative price momentum).
The security highlighted today is on the positive breakouts list. It has delivered solid returns to unitholders over the years given its strong growth profile, and analysts believe the unit price will continue to climb higher. Discussed below is Boyd Group Income Fund (BYD.UN-T), a highly recommended security by analysts with 11 buy calls.
A brief outline is provided below that may serve as a springboard for further fundamental research.
Winnipeg-based Boyd Group operates a network of non-franchised collision repair centers across North America, mostly in the U.S., under banners such as Boyd Autobody & Glass, and Gerber Collision & Glass.
Boyd also operates auto glass shops across 31 U.S. states under banners such as Glass America, Auto Glass Service, and Auto Glass Authority. The majority of Boyd's revenue stems from the U.S., with less than 15 per cent of sales from Canada. Boyd is the second-largest retail auto glass operator in the U.S. Furthermore, over 90 per cent of its revenue is generated through insurance carriers such as State Farm Insurance, Allstate, and Geico.
Before the market opened on Nov. 8, the Fund reported lower-than-expected third-quarter financial results as earnings were negatively impacted from hurricane activity in the U.S. Despite the earnings shortfall, the unit price rallied 2.7 per cent on high volume as financial results were strong after accounting for Hurricane Irma and Harvey. Furthermore, the positive outlook remains intact. As a result, the unit price rallied sharply with nearly 200,000 units traded that day, well above the three-month historical daily average trading volume of approximately 54,000 units.
To recap, reported sales were $392-million, up 13.5 per cent year-over-year. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) came in at $35.6-million, up 12.5 per cent, but shy of the consensus estimate of $36.4-million. Management estimates that the hurricane activity reduced adjusted EBITDA by $2.8-million.
Management remains focused and committed to doubling the size of its business over a five-year period ending in 2020, equating to an average annual growth rate of 15 per cent. The company operates in a highly fragmented industry, allowing Boyd to grow through acquisitions. In 2016, the company added 58 locations. As reported in the Fund's recent third-quarter Management's Discussion and Analysis (MD&A), 99 locations have been added so far in 2017. Boyd is well capitalized with over $400-million in cash and available credit to fund its growth. Furthermore, the Fund has a healthy balance sheet with its net debt-to-EBITDA ratio (trailing 12 months) at 1.4 times.
Boyd pays its unitholders a monthly distribution of 4.4 cents per trust unit, or 52.8 cents per unit on a yearly basis. This equates to a low annualized yield of 0.55 per cent. In November of every year, going back to 2011, management has announced an increase to its monthly distribution, and this year was no different. Earlier this month, a 2.3 per cent distribution increase was announced, lifting the distribution to its present level of 4.4 cents per unit (payable in December) from 4.3 cents per unit. Annualized dividends have increased by 13 per cent since 2012.
The payout ratio is conservative, suggesting the distribution is sustainable. For the first nine months of 2017, the payout ratio based on adjusted distributable cash stood at 13 per cent.
The Street is forecasting EBITDA of $144-million in 2017, rising 23 per cent to $177-million in 2018, and forecast to reach $205-million in 2019. Earnings per unit is anticipated to come in at $3.03 in 2017, up from $2.92 in 2016, and rise to $3.89 in 2018 and $4.65 in 2019.
Financial expectations have moderated in recent months. For instance, three months ago, the consensus EBITDA estimates were $148-million for 2017 and $180-million for 2018.
The Fund is well covered on the Street. There are 11 buy recommendations and two 'sector perform' recommendations.
The firms providing research coverage on Boyd are as follows in alphabetical order: AltaCorp Capital, BMO Capital Markets, CIBC World Markets, Cormark Securities, GMP, Jefferies, Laurentian Bank Securities, Macquarie, National Bank Financial, Raymond James, RBC Capital Markets, Scotia Capital, and TD Securities.
In November, five analysts revised their recommendations – three analysts made upward revisions and two analysts lowered their expectations.
Gavin Fairweather, the analyst at Cormark Securities, increased his target price to $110 from $105 as did Chris Murray, the analyst from AltaCorp Capital. Steve Arthur from RBC Capital Markets raised his target price to $103 (the low on the Street) from $101.
Taking an opposing viewpoint, Jonathan Lamers, the analyst from BMO Capital Markets, trimmed his target price by $2 to $107 but maintained his "outperform" recommendation. Mark Petrie from CIBC World Markets lowered his target price to $105 from $106.
According to Bloomberg, the stock is trading at an enterprise value-to-EBITDA multiple of 11.3 times the 2018 consensus estimate, slightly above with its three-year historical average multiple of 10.1 times.
The consensus one-year target price is $109.83, suggesting the Fund may deliver a price return of nearly 14 per cent over the next 12 months.
Individual target prices range from a low of $103 (at RBC Capital Markets) to a high of $117 (at GMP). Individual target prices are as follows in numerical order: $103, $104, $105, two at $107, five at $110, $115, and $117.
Insider transaction activity
So far in 2017, there has only been one trade in the public market reported by an insider. On Nov. 16, the Chairman of the Fund's board of trustees Allan Davis sold a total of 4,000 units at an average price per unit of above the $93 level.
Boyd's unit price remains in a multi-year uptrend. The Fund has delivered a respectable return with the unit price rallying 13 per cent year-to-date. In 2016, the unit price increased 29 per cent. In 2015 and 2014, the unit price rose 39 per cent and 44 per cent, respectively.
In terms of key resistance and support levels, there is initial overhead resistance between $100 and $102, near its record closing high of $102.12 reached on June 9. Looking at the downside, there is initial support around $92, near its 50-day moving average (at $93.54) and its 200-day moving average (at $92.08). Failing that, there is major support around $90.
The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company's dividend policy, analysts' recommendations, and provides a brief technical analysis for a security to provide readers with more information.
If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.
Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indexes that have a minimum market capitalization of $200-million.
A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.
|Positive Breakouts||Nov. 28 close|
|ATD.B-T||Alimentation Couche-Tard Inc||$64.75|
|ALS-T||Altius Minerals Corp||$13.18|
|GBT-T||BMTC Group Inc||$15.63|
|BYD.UN-T||Boyd Group Income Fund||$96.60|
|CIX-T||CI Financial Corp||$28.91|
|CVG-T||Clairvest Group Inc.||$38.53|
|KBLT-T||Cobalt 27 Capital Corp.||$10.80|
|CSU-T||Constellation Software Inc||$778.63|
|MJN-T||Cronos Group Inc.||$4.53|
|EQB-T||Equitable Group Inc||$66.73|
|EIF-T||Exchange Income Corp||$36.75|
|FC-T||Firm Capital Mortgage Investment Corp||$12.85|
|GIL-T||Gildan Activewear Inc||$40.81|
|ITP-T||Intertape Polymer Group Inc||$21.68|
|LAC-T||Lithium Americas Corp||$13.75|
|ML-T||Millennial Lithium Corp.||$3.74|
|NMX-T||Nemaska Lithium Inc.||$1.98|
|NYX-T||NYX Gaming Group Ltd.||$2.46|
|PBL-T||Pollard Banknote Ltd.||$17.25|
|RME-T||Rocky Mountain Dealerships Inc||$13.24|
|VBV-T||VBI Vaccines Inc||$6.15|
|VNP-T||5N Plus Inc||$2.79|
|AAV-T||Advantage Oil & Gas Ltd||$5.98|
|AOI-T||Africa Oil Corp||$1.44|
|AKG-T||Asanko Gold Inc||$0.84|
|BIR-T||Birchcliff Energy Ltd||$4.71|
|BNP-T||Bonavista Energy Corp||$2.21|
|REF.UN-T||Canadian Real Estate Investment Trust||$45.38|
|CG-T||Centerra Gold Inc||$7.31|
|CR-T||Crew Energy Inc||$3.77|
|HR.UN-T||H&R Real Estate Investment Trust||$21.26|
|GUD-T||Knight Therapeutics Inc||$7.74|
|MTL-T||Mullen Group Ltd||$15.06|
|NFI-T||New Flyer Industries Inc||$48.29|
|NGD-T||New Gold Inc||$3.96|
|OR-T||Osisko Gold Royalties Ltd||$15.28|
|PTG-T||Pivot Technology Solutions Inc.||$2.29|
|TV-T||Trevali Mining Corp||$1.34|
|TDG-T||Trinidad Drilling Ltd||$1.45|
|WCP-T||Whitecap Resources Inc||$8.55|