BCV Bulletin - Recent Trading Activity - January 14, 2025
SELL: Analog Devices, Inc. (ADI-US)
We exited our position in Analog Devices, Inc. (ADI), a global semiconductor company that produces analog and embedded processing chips for various markets. While the stock has performed well, with a 15.3% annual return over the past five years, we view the current valuation at 30 times next year's projected earnings as expensive. Although Analog Devices benefits from higher margins by bundling software with its devices, we believe this advantage is not sustainable in an industry increasingly favoring lower-cost manufacturers, particularly those with American-based production.
BUY: HCA Healthcare, Inc. (HCA-US)
We added to our existing holding in HCA Healthcare Inc. (HCA). The recent U.S. election has created volatility in the healthcare sector due to the perceived risk of significant reforms, and we see this as an opportunity to add to a high-quality business at a price below what we view as its intrinsic value. In the long run, we believe that HCA can continue to deliver. It possesses a wide moat derived from its scale, market share, and strong brand reputation. Regardless of policy changes, the demand for healthcare services will only grow as the population ages. Furthermore, HCA's commitment to returning value to shareholders through share buybacks and dividends, which have increased 12% per year over the last five years, reinforces our confidence in the long-term execution of the company.
BUY: Toromont Industries Ltd. (TIH-CA)
Toromont Industries Ltd. is the largest authorized dealer of Caterpillar equipment in Eastern Canada. Equipment includes bulldozers, excavators, loaders, motor graders, articulated trucks, and compacters. Toromont provides services from sales and distribution, rental services, and technology services. Additionally, they provide the engineering and installation of refrigeration systems in industrial markets. The outlook for the business is strong due to long-term commitments to infrastructure spending in Ontario and Quebec. The company has a strong history of execution from double-digit increases in sales, earnings, and dividends for over a decade. They also have had 35 consecutive years of dividend increases and have minimal debt, with over $1 billion of cash on the balance sheet. We believe the current entry point provides an attractive opportunity.
This BCV Bulletin is intended for residents of the provinces and territories in which we are registered, is not meant to be a solicitation to any persons not resident in those jurisdictions and does not constitute an offer to buy or sell our products or services. Any opinions expressed are just that and are subject to change. Information is provided on a best-effort basis and its accuracy cannot be guaranteed. Information may also be provided from third party sources which are believed to be reliable, but we do not guarantee its accuracy or completeness. Certain statements may contain forward-looking statements, which involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. This BCV Bulletin has been prepared for general informational purposes only, is not intended as investment and/or financial advice on any subject matter and the securities mentioned should not be construed as a recommendation for any specific securities. ©BCV Asset Management Inc. 2025.
