Our first idea is a company that is expected to grow more than 20% next year, and we are taking profits on our sale recommendation.
Buy: Andrew Peller Limited (ADW-A.TO)
From Internet Wealth Builder
Andrew Peller Limited (ADW-A.TO) is a leading producer and marketer of Canadian quality wines with operations in British Columbia, Ontario, and Nova Scotia. Its premium brands include Peller Estates, Trius, Hillebrand, Thirty Bench, Crush, Wayne Gretzky, Sandhill, Calona Vineyards Artist Series, and Red Rooster. It also produces several mass-market brands such as Peller Estates French Cross.
After trading in the $17-$18 range for most of the first half of 2018, the stock went into a slide and dropped as low as $11.64 in December before recovering to the current level.
The company reported solid results for the second quarter of fiscal 2019, ending Sept. 30. Sales were up 12.5% in the quarter and 10.5% for the first half of the fiscal year. Adjusted net earnings were up slightly, coming in at $10.4 million ($0.24 per share) for the quarter. That compared to $9.6 million ($0.23 per share) the year prior. For the six-month period, adjusted earnings were $20.2 million ($0.47 per share) compared to $17.8 million ($0.43 per share) in the prior year.
Overall bank debt decreased to $159.9 million as of Sept. 30 from $171.7 million at March 31. This was due to the strong earnings in fiscal 2019, the positive impact of working capital management, and regularly scheduled debt repayments. With the decrease in debt, the company’s debt to equity ratio improved to 0.69:1 compared to 0.78:1 at March 31, 2018.
In June the directors approved a 13.9% increase in common share dividends. The annual dividend on Class A shares was increased to $0.205 from $0.18 per share previously.
Buy. This is the best way to participate in the on-going growth of the Canadian wine industry.
Gordon Pape, Internet Wealth Builder, www.buildingwealth.ca, 1-888-287-8229, January 21, 2019
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