Chris BlumasCGI Group (A)GIB.A.TOTOP PICKAug 03, 2023

It is a fantastic business, well managed, with a very steady ROE and consistent performance. It is his second choice in large cap tech in Canada with Constellation Software being his first choice,

Global IT outsourcing and consulting. Pure service. Really well run. Helped by trends toward digitization, including reducing labour costs. Good at allocating capital. Durable business. 18x earnings. Flexibility to create value by acquisitions, buying back shares, and organic initiatives. GAARP. No dividend.

A fine company. Revenue is growing 11% and EPS 16%. The one issue is 65-70% of their business comes from two sectors--government and financials, and a third comes from the US. They've bought fine companies though. The AI boom will lead to companies needing consulting, which benefits CGI.

Growth rate of 8.6% is fine, trading around 17x 2024 earnings. Quality name. Solid pipeline of government contracts. Macro pressure caused Q3 miss. Near its highs. Likes it longer term, but he'd be selling in a registered account to buy some of the beaten-down names.

They are IT consultants and the company is one of their largest positions. It is always buying back stock or distributing some cash to shareholders. Along with increased margins it is at a good valuation, so a good time to buy. It is globally diversified, growing very well by acquisition, and gives a high return on invested capital.

Good results, but a cautious tone on the conference call. Possible cutback in IT spending. In the right place at the right time. Riding the AI trend. Not really that expensive. He plans to own it for a long time.

Absolute compounder on organic growth and acquisitions. Benefits from global digitization. Will be at the forefront of taking advantage of AI. Contracts with governments, banks, Fortune 500 companies. No dividend, uses free cash to keep making acquisitions.

Well run. People are trying to combat wage and cost inflation with technology. Global. Robust cashflows. Wait for pullback to add.

Has done well. More of a smaller, niche company. It's a matter of size and how you want to allocate exposure. CSU is his only software company, other than in the US. He likes the US because of the broader diversification to be had.

Initially chose it because it was undervalued compared to peers, saw growth potential organically and through acquisition. Has added verticals and geographic scope. Canada is only 20-30% of revenues, rest is global. Management has disciplined approach to acquisitions. Strong balance sheet. Valuation's increased, deserved due to higher margins. Still cheaper than ACN.

Drawbacks include no dividend and founder-controlled.

Very well run. Very strong as of late. 3-year earnings growth is quite strong. Driven by trend to digitization. With increased labour costs, pressure on companies to use technology. Wonderful business. Valuation is above his buy price, add on a pullback.

Has long owned this defensive tech name. Shares are catching up after Covid. Outsourcing and consulting are their businesses. The former is doing very well; targeting 70% of revenues in this business. Consulting amounts to helping businesses digitize and cybersecurity; growing well too. The PE is higher now, but compared to Accenture is a discount. Don't chase it. Pays no dividend.

Great business over a long time. Likes its large cap nature right now. Very liquid. Strong underlying business, still hiring, valuation still very reasonable given its stability. Benefits from outsourcing. Deserves a higher multiple.

Has owned this since 2010 at $15. Are very global. Have grown through discipline acquisitions in Europe and US. Their backlog continues to grow as more companies digitize and want cybersecurity, willing to outsource their back office. The PE has risen in recent years, so buy on pullbacks.