Investing

Investing Idea - Dividend Growth

  • Last Updated:
  • Oct 12th, 2019 3:08 pm
Jr. Member
User avatar
Dec 2, 2017
137 posts
70 upvotes
Hi Rod,
What's your intake on CGNX? It hit 52w low. And after Q3 earnings another 10% down today. However, they increased the dividend (growing for 8 years) and authorized another 200m buyback. 800k in cash and no debt.
It looks very attractive now I think.

Appreciate your opinion on this one.
Member
Oct 13, 2009
232 posts
27 upvotes
North York
Hi, Rodbarc

Are we still staying with MAXR? Any feedback for today?

Thanks and regards.
Newbie
Nov 24, 2017
62 posts
12 upvotes
coolkecool wrote:
Oct 31st, 2018 10:16 am
Hi, Rodbarc

Are we still staying with MAXR? Any feedback for today?

Thanks and regards.
My feedback: I picked the wrong day to average down (<1 week ago!) :(
[OP]
Deal Fanatic
User avatar
Dec 14, 2010
5435 posts
5533 upvotes
coolkecool wrote:
Oct 31st, 2018 10:16 am
Hi, Rodbarc

Are we still staying with MAXR? Any feedback for today?

Thanks and regards.
I never make a decision on extreme days. I'm holding and will dive through more info later. Management had warned of weak guidance, but results came far worse than expected. MDA always had a stellar operating record, and every time a large acquisition is made, there are risks on how that will be executed. I can give lots of examples on that, the most recent on EMP.A acquisition that was poorly executed and took a hit on their operating results. But they expect to be back on track (operating results) for the next year and after that - stock price will follow accordingly. Same thing with MDA, which did a massive purchase funded with debt, which is now MAXR. Management made very clear that cash will free up by 2020, and there are no major debts to be paid by then. But the market has been paying attention to what Spruce Capital highlighted, on negative GAAP earnings, and the fact that another big transformation will need to take place regarding geosat elephant in the room. By end of this year it will be known what management plans to do, either scale down or sell assets. The current price dive will make dividends look higher than it should, putting further pressure on management to cut it to repay debt.

MAXR is facing several challenges, and it's too early to make any decision. I usually don't let a bad quarter or bad year influence on selling unless dividends are cut. Nothing changed in that regard, for now. I'll get more info and post here, but will likely need a few more quarters to get a better idea.


Rod
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Member
Oct 13, 2009
232 posts
27 upvotes
North York
Hi, Rod

Thanks and appreciate your feedback. I will be sticking with this as well until you update your blog:)

Ke
Member
Jan 30, 2017
309 posts
37 upvotes
Hi Rod

I came across TFI international.. a serial dividend increased and a surging business.. but I’m surprised it’s not on your watchlist.. is it because it’s good only during good times of the exonomy?? It is a pretty good growth stock
Deal Fanatic
Jul 7, 2004
5242 posts
902 upvotes
rodbarc wrote:
Oct 3rd, 2018 10:45 pm
It's not a concern for me, because what matters is the operating cash flow to maintain liquidity in the short term and a long term plan to reduce that debt. They are on track so far and guidance didn't change. MAXR has a plan to address the current debt it by deleveraging it.

First, it's important to understand their liquidity position. MAXR has $600 million undrawn bank revolver line of credit as per their latest statement (June 30, 2018). There are no material debt repayments required until 2020. MAXR is expected to achieve full-year 2018 adjusted cash flow targets driven by working capital improvements and the securitization of orbital receivables in the 2nd half of this year. Furthermore, CAPEX is estimated to decline considerably in 2021 (no expected satellite construction until 2023), following construction of WorldView Legion satellite constellation, which will provide collection continuity for Worldview 1 and Worldview 2, as they reach end of life. Also, WorldView Legion has lower cash requirements and depreciation expenses, which will improve capital efficiency and ROIC for MAXR (Worldview Legion constellation expected costs are more than 60% lower than the current on-orbit satellites original costs, largely due to newer technology that is lighter, cheaper and can benefit from economy of scale, and due to lower construction and launch costs).

Management confirmed that limited delevering will occur the near-term as MAXR continues to work on Legion Constellation belt. However, once it's done, MAXR expects to generate free cash flows streams to allow for significant reduction in debt and leverage. Also, the increase of interest rates are not a concern because management forecast a higher rate than the current ones, and they have locked in now over $1 billion of MAXR debt with interest rate swaps which will secure those interest rate cost over the next three to four years on portion of their debt.

For these reasons, although I agree that the debt and leveraging level is high, I think it's well under control, and they have a solid plan to bring to lower levels without compromising growth.


Rod
God damn

** just read your reply few posts up. You'd think now would be the time to buy. I mean could it possibly go any lower.
Member
Jul 4, 2012
224 posts
46 upvotes
Can someone help me with the adjusted cost base for loblaws after the spinoff? How should it be calculated?
Jr. Member
Sep 27, 2004
158 posts
18 upvotes
Vancouver
Salomon1260 wrote:
Nov 8th, 2018 7:14 pm
Can someone help me with the adjusted cost base for loblaws after the spinoff? How should it be calculated?
what are you doing with your WN shares? I'm not sure whether to sell it or just keep it
Jr. Member
Nov 21, 2015
180 posts
34 upvotes
Vancouver
Hi Rod,

What do you think of Pepsi? I am thinking to buy and hold. The dividend payout is not bad?

Thank you in advance.
Deal Addict
Jan 28, 2007
2123 posts
1441 upvotes
SW Ontario
Jackson75 wrote:
Nov 13th, 2018 11:03 pm
Hi Rod,

What do you think of Pepsi? I am thinking to buy and hold. The dividend payout is not bad?

Thank you in advance.
I've owned it for years ... no complaints here
I'd rather be outdoors camping, kayaking, and mountain biking ...
Penalty Box
Apr 27, 2015
1330 posts
255 upvotes
Jojo_Madman wrote:
Nov 14th, 2018 10:57 am
I've owned it for years ... no complaints here
Same here :)
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