Gildan Activewear Inc. (GIL.TO)

(A Top Pick January 20/17 Up 11%). Earlier in the year there were concerns the Trump Administration would institute a border adjusted import tax, but this seems to have faded away. They are a low cost producer and he continues to like it. Good company with a great balance sheet.

Great growth in recent years. They use cheap labour in foreign countries, which is a problem for some. Valuation is now more reasonable than before. They're getting better penetration and enjoy low costs. Is there risk exposure selling in the States given NAFTA concerns?

Has a huge market share in the screen printing business in the US. A good track record and good history, but doesn’t see huge upside growth. Prefers something where you can get a higher return and better dividend.

The market they are in is getting very competitive. It’s been a well managed company over the years, but it hasn’t shown up on his screen as being particularly value-oriented at this point.

For the last 5 years, the FMV has been sort of a fulcrum around which the stock has been trading. That fulcrum now is $36. The stock had a nice little run and is now backing off. He wouldn’t be surprised, given the history, that we are going to see further weakness. Wait for the $33-$34 area where you could get a good buying opportunity.

The problem with it is that the stock is fairly well valued. There has not been a lot of movement in the earnings for quite a while. It has been trading about its fair market value. It needs its earnings moving.

This has a huge presence in the screen printing business in the US and Canada. They did come out with conservative guidance over their last quarter, so the stock hasn’t performed very well. There is a little bit of uncertainty about what the retail sector looks like right now. He would look elsewhere.

(A Top Pick Feb 9/16. Up 9.1%.) He is constructive on this company because he thinks they are going to be able to construct their volumes over time. The stock price has come off because of concerns of border adjusted tariffs, and the impact it could have. However, they do have production in the US which mitigates some of that risk. A low-cost manufacturer. Still a Buy.

T-shirts, underwear, socks, sweatshirts. Low cost producers with operations globally. The US does not produce a lot of T-shirts, underwear or socks, and this company has a plant in Georgia that spins the yarn for socks. Trading at 14X earnings. Debt to cash flow is 1.3X. They have a great history of growing their dividends. There is a lot of negative sentiment in the stock. As a low-cost producer, they will be able to compete efficiently. Recently bought the name of American Apparel, not the manufacturing. Dividend yield of 1.24%. (Analysts’ price target is $42.11.)

(Top Pick Feb 25/16, Down 3.34%) He got a small profit out of this one. They are a great low cost operator. But they did not get any traction so he moved on. They are now acquiring American Apparel’s distribution assets.

Acquiring American Apparel. Gilden has been a really good operator, and it has been hard to get into a multinational company listed on the Canadian exchange. They’ve managed to have a good reputation in terms of not using slave labour, etc. and have great penetration in the marketplace. Whether this acquisition is going to work for them are not he is going to wait and see. He is going to watch and see what the news flow is, before he does anything.

A fairly, highly valued stock. It has been growing nicely, but when they get to the stretched end of their valuation range, he backs away. Wouldn’t rush out to buy this.

This is a good time to buy this, especially on the recent pullback. A couple of years ago they were earning an 18% ROC, and then they made a big investment and there was a bit of lag in their cash flow. The Return dropped, but the street was pretty smart in seeing through that, but in his data, that gives him a little bit of a pause. The return went down to 6% but is now up to 13% and seems to be climbing back.

Model price is $37.90. It is coming back to the bottom of the zone, EBV +4. Watch it here. $25.44 would be were to buy it.

He is looking at this quite closely. It has underperformed recently, but they are very smart allocators of capital. Have great warehouses and a great infrastructure base. They are subject to commodity prices that they can’t control. Generating lots of free cash which they can use to expand their moat, distribution and infrastructure.