Airboss of America (BOS.TO)

(A Top Pick June 24/16. Down 4.25%.) He pulled this after they had some pretty bad news and poor earning results. Management is doing the right thing by paying down debt and buying back shares. Their free cash flow is still fairly strong. He wouldn’t bother owning this until you saw some better outlook coming from management.

(A Top Pick April 28/16. Down 18%.) This has had quite a good history for 2-3 years, and got hit by the oil/gas sector, and a very, very slow defence buying in the US. This is still a Hold.

The biggest rubber compounder. They are sole supplier for all the chemical and biological resistant boots and gloves for the US and Canadian armed forces. They will benefit from the pickup in infrastructure spend. They also do rubber bushings for the auto industry. (Analysts’ target: $14.00).

Has always liked this, but they are still exposed to areas of the economy that are struggling. It is going through a transformation right now and there will be bumpy quarters along the road. We are going to see a turn around in US military spending, as well as elsewhere in the world.

It looks cheap here. It might be a value trap because the last couple of quarters have not been good. He is not adding but has not sold. He hopes things will start to turn in the next couple of quarters.

This does rubber compounding solutions, like repairing treads, conveyor belts, etc. They bought a defence products company recently. None of those businesses are really working out too well. This is more of a macro growth issue. He likes it from a value perspective, but now with the recent weak quarter and the management outlook, it hard to find much to like about the company. It could be used as a tax-loss sale, and look at returning in 6 months’ time when management outlook starts improving.

Had owned this in the past. Because of earnings, it continues to drop-down in rankings. The concern is with the defence spending and their contracts, which tend to be pretty lumpy. They’ve really come back of late. If he sees some increase in US military spending, there is probably some potential, but will probably be several quarters in the works. Strong management. Wait until you see their next quarter.

(A Top Pick June 24/16. Down 5.05%.) Does different types of rubber compounds for the self defence industry. A deeper value type of name, trading at 9X earnings. The recent quarter wasn’t great, and the next one probably won’t be overly exciting either. Things will eventually pick up, and he thinks it will move quite well when that happens. He still likes it.

This was a darling last fall and in the early part of this year, but has really sold off. A lot of that had to do with prospects for their business and the multiple that the market was paying. They are in rubber compounding and do a lot in defence, which will be where their uptake is in the next few years. With the US candidates’ comments, there is potential for bigger military and bigger military spend. The major shareholder on this is the CEO.

(A Top Pick Aug 5/15. Down 44.52%.) Was really surprised at how poorly this one had done. To a large degree he thinks it is the way the market is treating the stock.

(A Top Pick Aug 4/15. Down 41.02%.) This was disappointing. What he likes is good growth, good cash flow, high insider ownership and a nice little dividend. This company has it all. Had done very, very well and then hit some hiccups. Their costs went up and they were hit with the US$ currency. He is not giving up on this.

This does rubber compounding and engineering products. They are producing specialty rubbers and putting them into specialty types of products. Did an acquisition a year ago, a US defence business. Now it is quite cheap. The majority of revenues come from the materials and resources sector, which has been weak in the past. There is a bit of a resurgence and over time the mining and resource companies will start reinvesting their capital, and this will flow through to a company like this. Dividend yield of 1.84%.

A rubber compounding company. The most interesting thing they do is called Flexible Products, a company they bought, which makes flexible components for cars. There has been weakness in anything to do with automobile components, because everybody believes we are at peak auto sales. Also, oil prices have been rallying, which is an input into making rubber. Rubber components are actually picking up. This is a pretty attractive Buy here.

(Market Call Minute.) Great company that is well-run. A long-term hold with the opportunity to buy it on weakness.

(Market Call Minute.) This will certainly grow over time, but right now has run into the same situation that has been seen with Windpact, i.e., it was really the market darling last year with investors rotating out of that space when earnings kind of flattened. If you don’t own it, you could be looking at it here.