Recipe Unlimited Corporation (RECP.TO)

Has been suffering lately. It went from being overpriced to being hugely underpriced. Part of the reason is that they have a good set of their operations in Alberta, and the weakness in the energy patch has hurt sales. Recently they’ve suffered by negative same store sales, which apparently has now turned positive. They’ll be hurt by rising minimum wages in Alberta and Ontario. Dividend yield 1.7%. (Analysts’ price target is $27.)

Has been suffering because of the increase in minimum wage in Ontario. Thinks the increase is a great idea. If you take people who are earning less than $12 an hour, and all of a sudden up their wages by $3 an hour, they are going to spend the money for the most part because they need to. That in itself will create jobs.

Looked at this a year ago, but couldn’t get excited about the name. He’d rather put his money in a name like Starbucks (SBUX-Q). The valuation is not cheap enough to get him excited.

(Top Pick Sept. 9/16, Down 22.60%) He is disappointed. They have a big exposure to Alberta and the impact from oil is going down. Same store sales are starting to stabilize. It is too cheap to see it here, but it has probably seen its bottom.

It has not been a good investment in the short term. Their Western Canada acquisition exacerbated their exposure to their Alberta and Saskatchewan markets. They are going to expand their St. Hubert and Swiss Chalet products in supermarkets.

(Top Pick May 2/16, Down 19%) It was a disappointment because their same store sales were pretty anemic. It had to do with the oil patch. Long term they are investing in their restaurants and turning them around. St. Hubert in Quebec was a good investment.

This has been a very interesting turnaround. They’ve done a great transition on costs, and have become better on marketing. There are some short-term challenges in terms of the economic environment, primarily in the West. It is very much a franchise model they are shifting towards that with many other banners. Generates solid cash flow. Not the cheapest stock, but you have to give management credit with what they have done. Reasonable value for what you are getting. Dividend yield of 1.5%.

This has been a disappointing stock since he bought it. The largest restaurant company in Canada. It grows by acquisition and franchising’s operations. Alberta has been hurting the stock. Just made an acquisition of a large Québec operation. Trades at a discount to US counterparts. Dividend yield of 1.57%. (Analysts’ price target is $30.86.)

This seems to be in the mode of buying more. You will probably get a dividend increase over time, but they are on the acquisition trail, so they are on the growth mode.

This has not been performing in this market, and he bought some just recently. Thinks the outlook is quite good. Believes it is the biggest restaurant operator in Canada. Have significant operations in Alberta which has been hurt by the fall in energy prices, as well as Fort McMurray. They made a significant acquisition this year of the St Hubert operations in Québec, which will pay off in spades in the long run.

2016 was definitely a step-back year. They had negative same store sales growth. There was weakness in Alberta. However, it is trading at a substantial discount now of 17X, versus its highly-franchised peers of around 25 X. He is modelling 17% EPS compounded annually over the next couple of years, from a combination of new store openings, innovations and digital marketing, as well as integrating their St Hubert acquisition. Dividend yield of 1.61%. (Analysts’ price target is $31.63.)

Looked at this when it fell back close to its IPO level, but he would never bet against Fairfax which owns a significant stake in the company. They are doing all the right things. They are trying to increase their network. Canada is just not in a growth mode right now, and they have too many stores out West. They have wonderful brands. The valuation is not cheap enough for him to get excited.

He likes the restaurant space. This is kind of unique in that it, along with MTY Food Group (MTY-T), is an acquirer of other brands. MTY is in the food court space mostly while this one is mostly in quick serve and self-serve dining. Very good management. He expects the dividend to start increasing. Good valuation and good growth opportunities. Dividend yield of 1.35%.

Brand new for him. He likes it because he wanted to increase his presence in Canada, but not in resources. It is the Canadian consolidator in the restaurant business. The dual class share structure is their only drawback.

(Top Pick May 11/15, Up 8.27%) Just acquired St. Hubert. It is the Swiss Chalet type of eating in Quebec. Management is brilliant. He thinks it will steadily rise from here. It is not winning big, however.