YB new stock pitches (Jan 30)

Algonquin Power & Utilities Corp. (AQN) is a regulated utility trading at 11x normalized 2026 EPS and 1.1x rate base, with a 5.8% dividend yield. Following the sale of its renewables business, AQN offers a de-risked 48% potential return in 12 months with minimal downside. The company targets a 16x forward P/E ratio, in line with industry peers. AQN's pro forma rate base is estimated at $8.059 billion, with a $6.40 price target based on a conservative 1.3x rate base multiple. Management projects 2026 EPS of $0.40, implying a 65% payout ratio. Catalysts include the Q1 2025 sale closure, March 2025 guidance, and ongoing rate case resolutions. New management, including Starboard-appointed directors, has implemented a strategic overhaul. Risks include investor fatigue, potential TSX60 exclusion, and rate case delays. The stock's recent underperformance is attributed to investor base turnover and tax-loss selling, presenting a buying opportunity as the company transitions to a pure regulated utility model.

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Computer Modelling Group Ltd. (CMG.TO) is a software company specializing in oil and gas reservoir simulation, with a market cap of 845M CAD. The company has a strong market position with 650 customers in 57 countries and a 98% renewal rate. Under new CEO Pramod Jain since 2022, CMG has implemented a growth strategy (CMG 4.0) resulting in a 28% revenue CAGR. The company boasts high margins (80.3% gross, 16.4% net) and a 26.7% ROIC. CMG is expanding into energy transition markets and has made strategic acquisitions (Bluware and Sharp Reflections) to enhance its offerings. The company's valuation appears attractive with a 4.2% FCF yield and potential for 14% annual returns based on projected growth. Key risks include technological disruptions, cybersecurity threats, and regulatory changes in the energy industry. CMG's strong management, diversified customer base, high Net Promoter Score (68%), and runway for growth in Geomodelling and Drilling & Completions make it an appealing investment opportunity.

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CK Asset (1113.HK) is a diversified property conglomerate with a market cap of $14.37 billion, trading at 6-7x trough earnings and <3x peak earnings. The company has pivoted away from China since 2012, with revenues now split roughly equally between Hong Kong, the UK, and the rest of the world. CK Asset operates in four main segments: infrastructure (7.5-8bn profit), investment properties (3-3.5bn profit), property development (4.5bn profit), and pubs (1bn profit). The company has minimal leverage (6%) and a sizeable cash pile (HK$33bn). It offers a 6% dividend yield and has recently started buybacks. Concerns exist over Victor Li's capital allocation compared to his father's track record, particularly regarding the £4.6bn Greene King pub acquisition in 2019. Despite these concerns, the company's cheap valuation, diversified portfolio, and strong financial position make it an attractive investment opportunity, albeit with the need to monitor future capital allocation decisions.

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