A retail investor was interested in investing in XPEL Inc., a market leader in the paint protection film industry. The investor felt that the company’s stock was undervalued and wanted to conduct a company valuation. She started by reviewing the company’s annual report for 2023 and gathered relevant market information for her analysis. On March 14, 2024, XPEL Inc.’s stock was trading at US$48.56 per share, which the investor believed was undervalued. However, she would have to consider all financial and market information she had gathered before reaching a final investment decision.
On October 27, 2017, the share price of McKesson Corporation and two other major US pharmaceutical distributors dropped by 7–12 per cent over only a few days. The stock price drop was fuelled by reports that Amazon Inc. had quietly acquired wholesales pharmacy licences in 12 US states and, a short time later, formed an independent venture with Berkshire Hathaway Inc. and JP Morgan Chase & Co. to improve the cost and quality of health care for the US employees of all three companies. These two notable events in the US pharmaceuticals market did not go unnoticed by a group of students enrolled in a value investing class, who wondered if it was possible for Amazon Inc. to disrupt the US health care industry, or if the market was overreacting to the two reports. Was McKesson Corporation’s future in the pharmaceutical distribution business in jeopardy, or was its stock suddenly in a favourable buy position?
On October 27, 2017, the share price of McKesson Corporation and two other major US pharmaceutical distributors dropped by 7-12 per cent over only a few days. The stock price drop was fuelled by reports that Amazon Inc. had quietly acquired wholesales pharmacy licences in 12 US states and, a short time later, formed an independent venture with Berkshire Hathaway Inc. and JP Morgan Chase & Co. to improve the cost and quality of health care for the US employees of all three companies. These two notable events in the US pharmaceuticals market did not go unnoticed by a group of students enrolled in a value investing class, who wondered if it was possible for Amazon Inc. to disrupt the US health care industry, or if the market was overreacting to the two reports. Was McKesson Corporation's future in the pharmaceutical distribution business in jeopardy, or was its stock suddenly in a favourable buy position?
An equity analyst at a value fund considers pitching to his fund manager the Canadian software maker Constellation Software Inc. The last software company he pitched was rejected for failing to meet the value fund's investment criteria of low analyst coverage and small market capitalization with either a strong competitive advantage or a low price-earnings ratio and a low price-to-book ratio. The analyst has heard that Constellation Software is earning very high returns on invested capital deployed and wonders whether the company's current valuation makes it a great business investment at a fair price.
An equity analyst at a value fund considers pitching to his fund manager the Canadian software maker Constellation Software Inc. The last software company he pitched was rejected for failing to meet the value fund’s investment criteria of low analyst coverage and small market capitalization with either a strong competitive advantage or a low price-earnings ratio and a low price-to-book ratio. The analyst has heard that Constellation Software is earning very high returns on invested capital deployed and wonders whether the company’s current valuation makes it a great business investment at a fair price.
Antony Ving had secured the highly coveted analyst position for the Western Investment Club (WIC), a student-controlled organization at the Richard Ivey School of Business that managed over $100,000 according to a disciplined value investing philosophy. He was preparing a presentation on Dun & Bradstreet (DNB) for the next WIC meeting. DNB was a leading provider of information, services, and solutions; it was in the business of selling accumulated information and research to customers interested in due diligence for risk management, expansion, and supply chain management purposes. While DNB had passed the investment committee’s screening, Antony had to delve into the drivers of value to distinguish whether DNB had sufficiently sustainable operating and financial advantages in a sustainable industry to qualify as undervalued. He had to present a comprehensive valuation and strategic analysis on whether DNB was a buy… or a bust.
A recent business graduate decided to contact her former classmates from her value investing course. She emailed them with a proposal to re-evaluate the company they had valued for their final project, National Presto Industries (Presto). Presto was a diversified company operating in three different industries: housewares/small appliances, absorbent products, and defense. The price had dropped about 25 per cent and perhaps it was time to take it off of the group’s “watch list,” as it might now be undervalued and worth purchasing. Presto was initially brought to the group’s attention through a screening process that identified Presto as having a low price to earning value, a high dividend yield, and a small market capitalization. It was unusual in that it was a company that was over 100 years old and operated in stable and unglamorous segments, yet was still considered a growth company. If it was determined that Presto was a good buy, the team also wanted to establish an exit price, but due to a tight concentration of shareholders and low average daily trading volume, the team wondered how this low liquidity would impact the stock’s share price.
A recent business graduate decided to contact her former classmates from her value investing course. She emailed them with a proposal to re-evaluate the company they had valued for their final project, National Presto Industries (Presto). Presto was a diversified company operating in three different industries: housewares/small appliances, absorbent products, and defense. The price had dropped about 25 per cent and perhaps it was time to take it off of the group's "watch list," as it might now be undervalued and worth purchasing. Presto was initially brought to the group's attention through a screening process that identified Presto as having a low price to earning value, a high dividend yield, and a small market capitalization. It was unusual in that it was a company that was over 100 years old and operated in stable and unglamorous segments, yet was still considered a growth company. If it was determined that Presto was a good buy, the team also wanted to establish an exit price, but due to a tight concentration of shareholders and low average daily trading volume, the team wondered how this low liquidity would impact the stock's share price.
A junior investment analyst at Maple Toronto Fund (the Fund), a “deep-value shop” whose main strategy was to invest in deeply undervalued businesses, was screening hundreds of small-cap stocks and came across HQ Sustainable Maritime Industries Inc. (HQS), an aquaculture and aquatic product processing company that operated in two product segments in China. A quick look at HQS’s financials suggested to the junior investment analyst that he had found the “holy grail” of value investing: a net-net stock. The junior investment analyst knew he had to perform in-depth due diligence to estimate the stock’s intrinsic value and determine whether the stock was truly undervalued. He wondered how to tackle the valuation; in addition to developing a deep understanding of the industry and the company’s business model and numbers, he considered the value-investing-based valuation approach. The junior investment analyst knew that demonstration of thorough analysis and accurate valuation of HQS might convince senior management of the Fund to acquire a substantial stake in HQS. If this investment was profitable, it could boost his career and prospects of advancement within the Fund. The junior investment analyst had one week to put his presentation together.
A junior investment analyst at Maple Toronto Fund (the Fund), a deep-value shop whose main strategy was to invest in deeply-undervalued businesses, was screening hundreds of small cap stocks and stumbled upon HQ Sustainable Maritime Industries Inc. (HQS), an aquaculture and aquatic product processing company that operated in two product segments in China. A quick look at HQS's financials suggested to the junior investment analyst that he had found the holy-grail of value investing: a net-net stock. The junior investment analyst knew he had to present an in-depth due diligence to estimate a stock's intrinsic value and determine whether the stock was truly undervalued. He wondered how to tackle the valuation; in addition to developing a deep understanding of the industry and the company's business model and numbers, he considered the value-investing-based valuation approach. The junior investment analyst knew that demonstration of thorough analysis and accurate valuation of HQS might convince senior management of the Fund to acquire a substantial stake in HQS; if this investment was profitable, it could boost his career and prospects of advancement within the Fund. The junior investment analyst had one week to put his presentation together.