BNN Market Call: Top Picks (Nov. 12, 2014)

 

AGT Food & Ingredients (AGT-T) Good momentum from food companies incorporating pulses (beans, lentils) into foods as a protein and fibre source and other health benefits (gluten-free, non-GMO). AGT recently signed a distribution agreement with Ingredion, a large supplier of ingredients to food companies like Kraft and General Mills. They are expected to increase capacity at one of their plants to support this growth.

 

DH Corporation (DH-T) They just did an equity issue this morning. They’ve been paying off debt post the acquisition of HFS in Q3 2013, which brought their US exposure up to nearly 50% of revenue and diversified them away from checking. That business has been growing very strongly and is a leader in lending and mortgage processing software. They continue to look for acquisition opportunities as a way of cross selling to their established client base. The equity issue sets them up well.

 

Magellan Aerospace (MAL-T) They supply the commercial and military aviation sectors – engine shafts, wings, nose landing gear, etc. They are exclusive suppliers for these components on certain planes and have exposure to key programs from Airbus (320) and Boeing (737). Their quality gives them an advantage as OEMs shift to longer term contracts as they look to secure supply given strong demand for new aircraft builds. Some have expressed concern that lower crude prices will derail orders for more fuel-efficient aircraft, which is the primary driver, but airlines take long term views on aircraft purchases and we believe the recent drop in crude is just noise.