Stock Watch: Session 2

Stock Watch will be a way for me to present companies I’m following with the hope of showing you some investment potential. As opposed to my Stock Talks, I won’t be going in-depth on one particular company, rather, I’ll be listing 2 or 3 that you should take a look at with a brief description of them/why I like them – do your homework as I am leaving a huge portion of information out of these posts.

I don’t necessarily own all/any of the companies presented in my Stock Watch postings, these listings are for idea generation purposes only.

This sessions stocks:

1. Grande West Transportation (Ticker: BUS-V) 

WHO:

Grande West Transportation (GWT) is a Canadian automaker specializing in mid-size transit buses, their objective being to target a Canadian/American niche market and optimize spending/efficiency through a leaner transit method. Similar to what Southwest Airlines did with variously sized planes, GWT aims to fill the voids of the one-bus-fits-all offering currently in the marketplace. Grande West manufactures their busses overseas in order to reduce costs, their designs scaling down the units to cut fuel expenditure by a third and reduce maintenance costs/extend the longevity of the automobiles. Given that most towns/cities operate transit buses at less than half full on average, Grande West gives them the opportunity to optimize smaller units (27.5, 30, or 35-foot busses – opposed to the standard 40-foot) and reduce long-term costs while still serving the needs of the community.

WHY:

  • They have more than doubled bus deliveries over the past 4 quarters – over $100 Million worth of sales on back order – as production expands profits will scale.
  • No market competition – too late for current bus makers to catch their momentum (prime for a takeover or should succeed in a blue ocean).
  • 10-12 year bus life-cycle w/ 30,000 transit buses in NA – huge growth potential.
  • Current deals with B.C. Transit, Oakville Transit, Burlington Transit, etc.
  • Expanding cross-border into the US market – already have existing deliveries/orders lined up.
  • Designing a line of electric transit buses (Vicinity) – will be the first of its kind.

Price at time of post: $2.30 CAD

2. Cheesecake Factory (Ticker: CAKE)

WHO:

The Cheesecake Factory is an American food chain specializing in gourmet entrées and specialty desserts. They have become famous for, you guessed it, their wide variety of original and elegant cheesecake options, has recently included a breakfast option to pair with their lunch/dinner menu and desserts. The Cheesecake Factory is a pop-culture staple & has great brand recognition, however, due to an uneasy retail climate during the past year they have seen their share price fall just over 40%. Although making somewhat of a recovery from their $39 low a few months ago, they are working from behind in an effort to prove to investors that sit-down restaurants still hold value and that their specialty market-space is here to stay.

WHY:

  • Recent expansions into Canada & Mexico/Asia – expanding market space and building on the national recognition from well-followed figures (i.e – Drake).
  • Introduction of the breakfast menu is set to increase day-time sales and boost revenues.
  • Implementation of online ordering/delivery will drive sales out of the store (often long wait times to get in the physical restaurant – will increase sales per night).
  • Huge cash reserve for potential investment/diversification opportunities (track record of having a great ROIC).

Price at time of post: $46.68 USD

Disclaimer: The companies listed above are purely for research purposes and are not formal recommendations. Please perform due diligence before making any investment decisions to prevent capital losses.

 

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