A humorous look at the companies that caught our eye, for better or worse, this week
Ag Growth International (DOG)
Don’t you hate it when you’re unloading lentils from a 35-metre high silo and the structure just collapses? Shares of Ag Growth plunged after a commercial storage bin manufactured by the company – one of 15 relatively new bins supplied to the same customer – failed at an export facility in North Vancouver. Thankfully, nobody was injured in the incident, which is under investigation. But with Ag Growth’s stock falling on concerns that the company could potentially take a financial hit, investors' portfolios are definitely hurting.
Carnival Corp. (DOG)
Looking for a deal on a used cruise ship? Now’s your chance. Facing mounting losses since the coronavirus brought the cruise industry to a halt in March, Carnival plans to sell 18 vessels – representing about 12 per cent of its capacity – in addition to eight older ships it has already unloaded. The company has also cut back orders for new ships over the next few years, “allowing us to pay down debt and create increasing value for our shareholders,” president and CEO Arnold Donald said. Act now and get a free captain’s hat with every cruise ship purchase!
American Axle & Manufacturing (DOG)
Looks like the wheels just fell off American Axle’s stock. General Motors' announcement that it plans to produce a family of electric vehicle drive systems and motors in-house signalled that suppliers such as American Axle could see their business with GM reduced. With GM accounting for about 37 per cent of the company’s sales in 2019 – down from 41 per cent in 2018 and 47 per cent in 2017 – the trend is not American Axle’s friend.
GameStop (STAR)
The past few years have brought nothing but agony for GameStop investors, as the proliferation of digital downloads and free online games such as Fortnite hammered the bricks-and-mortar retailer. But like a character in a first-person shooter game who refuses to die, the stock jumped this week after two brokerages upgraded the shares. Citing the imminent launch of the PlayStation 5 and Xbox Series X platforms, Jefferies predicted GameStop will “win big and early” from the new console sales. Unfortunately, with the stock down about 80 per cent over the past five years, long-term investors have already lost big.
Plaza Retail REIT (STAR)
Think tech stocks have been the only way to make money during the pandemic? Wrong. Since April 1, units of Plaza Retail REIT – which operates primarily open-air shopping centres focused on Ontario, Quebec and Atlantic Canada – have soared by about 27 per cent, as physical-distancing restrictions have eased, stores have reopened and tenants have resumed paying rent. The first clue that Plaza was going to be okay? During the summer, insiders including CEO Michael Zakuta were snapping up the units at fire-sale prices. Being greedy when others are fearful, indeed.
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John Heinzl