Giles Capital Weekly - Week 41
Welcome to another edition of Giles Capital Weekly. As usual, I’ll cover intriguing write-ups across various sectors and geographies. From the snowy peaks of Vail Resorts to the digital domains of Amazon, we're seeing companies adapt and thrive. Vail's innovative Epic Pass is reshaping the ski industry, while Amazon's soaring free cash flow demonstrates the power of its cloud and e-commerce dominance.
Elsewhere, geopolitical tensions are putting defence contractors like BAE Systems in the spotlight. There are also some fascinating niche plays to explore, including a Greek tobacco company trading at a mere 3x EV/EBIT and a Hong Kong REIT offering a nice 10% yield. Let’s get straight into it.
Americas
Rock&Turner on Enterprise Group(🇨🇦E TO - C$146 million) Enterprise Group, a leader in energy services, is capitalizing on Canada's LNG boom. Trading at 14.7x P/E with a strong order backlog and strategic positioning in the Western Canadian energy sector, the company offers growth potential at an attractive valuation.
Undervalued and undercovered on Innovative Solutions and Support(🇺🇸ISSC US - $116.2 million) ISSC, a niche player in avionics, is poised to capitalize on the growing autonomous flight market. Trading at 17.9x P/E, the company's exclusive agreements and growth potential offer an intriguing investment opportunity.
TQI capital on Vail Resorts(🇺🇸MTN US - $8.9 billion) Vail Resorts, with its innovative Epic Pass, is transforming the ski industry. Trading at 9x EBITDA, the company's irreplaceable assets and strong cash flow generation present an attractive investment opportunity.
Sanjiv on Interactive Brokers(🇺🇸IBKR US - $16 billion) Interactive Brokers is positioned for growth in the brokerage industry due to its low-cost model and technology focus. The company trades at a PE of 17.9 and has shown strong revenue growth with a CAGR of 18.4% in operating income from 2018 to 2023.
Value Don't Lie on GXO Logistics(🇺🇸GXO US - $6.9 billion) GXO Logistics, a contract logistics pure-play, is benefiting from e-commerce growth and supply chain outsourcing trends. Trading at 8.9x LTM EV/EBITDA, the company's strong free cash flow generation and growth prospects make it an interesting investment candidate.
Sweet Stocks on Robert Half(🇺🇸RHI US - US$6.9 billion) Robert Half is navigating a challenging labour market with its diverse staffing and consulting services. The company trades at 9x EV/EBITDA, presenting a potential opportunity as the staffing market recovers.
Europe, Middle East & Africa
Invariant on Karelia Tobacco Company(🇬🇷KARE GA - €943 million) Karelia Tobacco presents an intriguing case of a cash-rich, family-controlled tobacco company trading at just 3x EV/EBIT. The company's strong cash generation and high insider ownership offer potential, but capital allocation remains a key concern.
Schwar Capital on BAE Systems(🇬🇧BA/ LN - £33.5 billion) BAE Systems is well-positioned to benefit from increasing global defence spending. The company trades at a forward P/E of 13.8x for 2024, falling to 11.2x in 2025, based on expected EPS growth and the current market cap of £36.4 billion.
Asia-Pacific
Praya's Substack on SF REIT(ðŸ‡ðŸ‡°2191 HK - HK$6.9 billion) SF REIT, backed by Chinese logistics giant SF Express, offers a compelling 10% yield at 0.5x P/B. The REIT's prime logistics assets and strong sponsor support provide a unique opportunity in the Asian logistics space.
Money Muscle on Ashoka Buildcon(🇮🇳ASHOKA IN - ₹37.6 billion) Ashoka Buildcon, an Indian infrastructure player, delivered 156% PAT growth and 26% revenue growth in Q1-25. Trading at a PE of 11, the company's strong order book and margin expansion potential make it an attractive value play.
Investing in China - China's Tech Sector - The Pendulum Swings Back A thought-provoking analysis of the shifting regulatory landscape in China's tech sector. The author argues that government support for tech giants could unlock new growth opportunities. A must-read for anyone invested in or considering Chinese equities. (10 min read)
Leonid's Substack - China's Fiscal Policy Update A comprehensive breakdown of China's recent fiscal policy announcements. Leonid's analysis provides crucial context for understanding the potential economic impact and investment implications of these policy shifts. (8 min read)
Idea Hive - Exploring The Met Coal Industry: Part 4 The fourth and final installment in a series on the metallurgical coal industry. This comprehensive analysis offers valuable insights into the sector's dynamics, key players, and investment opportunities. A must-read for investors interested in the resources sector. (25 min read)
Best Anchor Stocks - The Hidden Costs That Hinder Long-Term Returns An insightful exploration of how hidden costs can erode long-term investment returns. The article provides valuable perspectives on portfolio management and is a must-read for value investors focused on maximizing their portfolio's performance. (15 min read)
Investment Ideas by Antonio - Amazon: Stock Price Tracks Culture Antonio offers an argument for Amazon's continued dominance, linking the company's culture to its stock price performance. His insights into Amazon's free cash flow growth and long-term potential make this a worthwhile read for tech investors. (12 min read)
Currently, I’m only featuring free content. If you're a writer producing free, insightful investment analysis and would like to be considered for inclusion, feel free to reach out. What would you like to see in future editions? Let me know in the comments.
Disclaimer: This newsletter is for informational purposes only and does not constitute investment advice. All opinions expressed are those of the quoted authors and do not necessarily reflect the views of the newsletter creator. Always do your own research before making investment decisions.