2023-10-11 18:03:29
MTY Power Group generated good financial results in the third quarter, according to Acumen. (Photo: The Canadian Press)
What to do with the titles of Stella-Jones, Tilray and MTY Power Group? Here are some analyst recommendations likely to move prices soon. Note: the author may have an opinion completely different from that expressed.
Stella-Jones (SJ, $64.66): an investor day that suggests good growth potential
National Bank Financial analyst Maxim Sytchev admits to having been a little hasty at the start of the year when he lowered his recommendation on the stock of Stella-Jones, changing it from “outperformance” to “performance equal to sector”.
The stock of the manufacturer of poles, railway ties, industrial products and residential lumber has jumped 33% since the start of the year, compared to a decline of 1% for The main index of the Toronto Stock Exchange, the S&P/TSX.
“The value of the stock has jumped 95% since the publication of our note published on July 13, 2022 which estimated that the stock was then greatly undervalued. The stock was then trading at a multiple of eight times expected earnings before interest, taxes, depreciation and amortization (EBITDA) over the next 12 months,” he says.
Despite this jump, the analyst points out that the value of the stock is currently trading at 9.1 times the expected EBITDA during the 2025 financial year. “This calculation excludes any contribution that might arise from the American infrastructure spending program, which should gain momentum in 2024 and 2025,” says the analyst.
The American program, signed in 2021, provided for spending estimated at 1,200 billion US dollars between 2022 and 2026 on the country’s infrastructure. “The American government, hit by natural disasters, wants to strengthen its electricity network to make it more resilient and less expensive to maintain,” explains the analyst, who believes that Stella Jones will get her share of the pie.
“We expect the company to raise its earnings forecast once more, which should lift the stock,” he believes.
Maxim Sytchev therefore gives Stella Jones stock an “outperform” recommendation and raises its one-year target price, from $73 to $83. It thus gives the stock a value of 11 times the EBITDA forecast in 2024-2025.
The analyst expects the company to generate diluted earnings per share of $5.50 in 2025, which would be an increase of 16% from his forecast of $4.74 expected this year.
Tilray (TLRY, US$2.12): baron of beer and king of cucumbers
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