A humorous look at the companies that caught our eye, for better or worse, this week
Things we’re still waiting for: 1) The Leafs to make it into the second round; 2) Donald Trump to “win” the trade war; 3) Roots’s stock price to rebound. Shares of the iconic Canadian retailer have shed more than three-quarters of their value since the company went public in October, 2017, and the stock tumbled again this week after Roots posted a larger-than-expected loss in the second quarter and said it will miss full-year financial targets. With same-store sales dropping 2.9 per cent amid weak store traffic and product delays caused by the move to a new distribution centre, the Leafs might win the Cup before this stock recovers.
Never mind “Where’s the beef?” What Wendy’s shareholders should be asking is: “Where’s the breakfast?” After three failed attempts to roll out breakfast across its more than 6,000 U.S. restaurants from just 600 currently, the burger chain plans to invest US$20-million to give it another shot in 2020. But given labour shortages, intense competition from other fast-food chains including McDonald’s and the fact that the investment will cause earnings to fall by an estimated 3.5 per cent to 6.5 per cent in 2019, investors aren’t eggsactly thrilled with the idea.
CT REIT (DOG)
You know when you’re waiting in the checkout line at Canadian Tire and the guy in front of you turns around and accidentally smacks you in the face with a snow shovel? That hurts. What hurts even more is investing in Canadian Tire’s property arm, CT Real Estate Investment Trust. The price skidded after Canadian Tire and CT REIT announced plans to jointly sell about 16.8 million units to a syndicate of underwriters at $14.25 each – a steep discount to the market before the offering was announced. That’s gonna leave a mark.
Maxar Technologies (STAR)
There’s an old saying on Wall Street (and in many butcher shops): “Don’t try to catch a falling knife." But trying to catch a falling satellite has paid off nicely for investors: After plummeting more than 90 per cent in 2018 and early 2019 amid weak results, heavy debt and the loss of a satellite that suffered a failure in its stabilization mechanism, shares of space technology company Maxar have been rebounding. This week, JPMorgan provided more fuel when it initiated coverage of the shares with an “overweight” rating, citing recent contract wins from NASA and other customers. Blast off!
MasterCraft Boat Holdings (DOG)
Get the lifejackets! Shares of MasterCraft Boat Holdings sprang a leak after the company – which makes recreational power boats under the MasterCraft, NauticStar, Crest and Aviara names – issued weak guidance for fiscal 2020 even as it posted better-than-expected results for its fiscal fourth quarter ended June 30. Citing “adverse weather conditions” and “eroding dealer sentiment” driven by economic and political uncertainty, the company now expects net sales and adjusted earnings per share to fall by low- and high-single digit percentages, respectively. Investors are abandoning ship.