Complimentary Equity Research From Boyar on CHTR, BEN, STKL ~ market folly

Tuesday, September 25, 2018

Complimentary Equity Research From Boyar on CHTR, BEN, STKL

We wanted to give readers a head's up that Boyar Research is currently offering complimentary equity reports on three stocks.  They consistently put out high quality research and this time around they look at one popular hedge fund name, and two other names you might be less familiar with.

Boyar sees 60% upside in each of these companies. You can read the full write-ups for free here and we've excerpted some of the reports below with permission:

Charter Communications (CHTR)

"We view Charter as a best-in-class operator in the midst of multiple transitions that should unlock faster growth in the coming years. Charter ramped up investment in the TWC and Bright House assets it acquired in 2016, which should result in lower capital intensity, lower churn, and incremental cost savings/margin expansion going forward. We estimate that video will account for < 20% of Charter’s consolidated revenues, net of programming costs, by 2019. Meanwhile, Charter holds a near-monopoly on high-speed Internet over much of its footprint, and its commercial business continues to grow at or near double-digit rates.

We project that Charter can grow Adjusted EBITDA from $15.3 billion in 2017 to $20 billion by 2022. Assuming no expansion in Charter’s forward EV/EBITDA multiple, we estimate that Charter’s intrinsic value could exceed $500/share by year-end 2021. Charter already retired 12% of its shares in 2017 and could have the capacity for ~$28 billion (a third of the current market cap) in additional repurchases over the next 4 years. Finally, we believe that Charter and indeed cable companies generally are in a better position than wireless operators to support the development of 5G, and Charter remains a likely seller over the long term."

You can read their full analysis of CHTR here.

Franklin Resources (BEN)

"Following a decline of more than 25% in its share price from recent 52-week highs, BEN now trades at just 1.2% of its AUM (adjusted for its large cash hoard of ~$8.5 billion of net cash/investments, or ~50% of its current market cap), representing a significant discount to industry precedent transactions, which have occurred at 2.7% of AUM, on average, over the past ~10 years.

Since the beginning of FY 2007, BEN has returned $15.1 billion to shareholders via repurchases and dividends/special dividends, representing 87% of its current market cap and an astonishing 178% of its current enterprise value. Returns to shareholders will likely continue to be robust thanks to the Company’s newfound liquidity, the result of the new U.S. tax law, which offers lower federal tax rates and more favorable repatriation features. In the wake of the passage of the new tax law, Franklin has paid a special dividend, increased its regular dividend by 15% to $0.92 a share (yield: 2.9%), and accelerated the pace of its share buybacks.

Based on our assumption that the Company’s AUM will increase at just a 2.5% annual rate over the next 2 years, and valuing BEN at a discounted 2.5% of AUM, we derive an intrinsic value for the Company of $55 a share, representing 74% upside from current levels. Should the value versus growth pendulum or the active versus passive pendulum shift in Franklin’s favor, our intrinsic value estimate will likely prove extremely conservative.

We believe that Franklin represents an attractive target for a financial services firm given its strong brands, favorable long-term investment track record, and strong global distribution. Moreover, the Johnson family’s ~40% stake, coupled with BEN’s strong balance sheet, could help facilitate a management buyout." 

Click here for the rest of their complimentary BEN research.

SunOpta (STKL)

"SunOpta is in the early stages of a multi-year turnaround that is expected to drive growth, increase profitability, and unlock shareholder value. The Company’s turnaround is being overseen by a new chairman and CEO, both of whom have a proven track record of unlocking shareholder value in the consumer products industry. Notably, SunOpta’s chairman recently presided over the value creation at AdvancePierre Foods for Oaktree Capital (a 23-bagger for that firm).

The Company operates in the attractive market for organic and non-GMO ingredients and consumer products, which is growing at a high single-digit/low teens (%) rate. The increasingly important millennial generation is expected to be a key factor sustaining future industry growth, as millennial parents are the largest purchasers of organic products in the U.S.

The prospect for increased private label penetration bodes well for SunOpta, which has a low-cost advantage over its peers thanks to its integrated sourcing and manufacturing business model.

In late 2016, SunOpta received an $85 million investment from Oaktree Capital, which has continued to increase its stake in the Company, acquiring nearly $60 million in STKL shares via open market purchases during 2017 at an average price of $7.36 a share.

Applying a discounted multiple, relative to precedent transactions, to our 2020E EBITDA, we derive an intrinsic value of $12 a share, representing 65% upside from current levels. Management is heavily incentivized to unlock shareholder value, as the CEO holds ~750k of performance-based stock options/units that vest at various increments/stock prices between $11 and $18 a share."

Read the free report on STKL here.

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