Pro Picks: 3 Misunderstood Stocks
Investing ideas from John Ewing of Ewing Morris
3 High Growth Stocks in Low Growth Markets
Watch the full episode: While everyone is chasing Nvidia or the next big thing, John Ewing of Ewing Morris is looking for high growth stocks in low growth markets. Those orphan stocks can ultimately provide great returns, says John. And if they don’t, his firm has a habit of going activist on companies. For audio-only listening: you can tune in on Apple, Spotify or here. Below are three stocks John believes are misunderstood by investors and offer big upside.
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Latham Group Pools (SWIM)
Latham Group Pools is making waves in the pool industry with its innovative fiberglass pools. Here’s why it’s a buy:
Market Share Growth: Latham’s fiberglass pools are gaining traction, taking a couple of percentage points annually from traditional concrete pools, especially in the Southern U.S., due to their lower upfront and maintenance costs.
Macro Tailwinds: Reduced availability of labor for concrete pool installations, influenced by recent political changes, enhances the cost advantage of fiberglass pools, which require simpler installation processes.
Earnings Potential: Even a modest recovery to 80,000 annual pool starts (compared to 60,000 currently) could nearly double EBITDA to $150-160 million, driven by continued market share gains.
Driven Brands (DRVN)
Driven Brands, a private equity-backed automotive services portfolio, is accelerating growth with its Take5 oil change business. Here’s why it’s a strong pick:
Category Leadership: Take5, the third-largest player in the quick lube category, is capitalizing on the shift away from dealerships and DIY oil changes, with room to double its 1,000 stores in five years.
Superior Customer Experience: A limited service menu eliminates aggressive upselling, leading to a top-tier net promoter score, faster service, and higher customer satisfaction compared to competitors like Jiffy Lube and Valvoline.
Cost Advantage: By requiring lower-skilled technicians, Take5 achieves a cost edge over competitors, enabling competitive pricing and supporting mid-to-high single-digit same-store revenue growth.
Minto Apartment REIT (MI.UN)
Minto Apartment REIT offers a value-driven opportunity in the Canadian real estate market. Here’s why it’s attractive:
Undervalued Assets: Trading at a 35% discount to net asset value, Minto’s portfolio of high-quality apartments presents significant upside if the assets are revalued or sold.
Strong Governance: Unlike many REITs, Minto’s structure is shareholder-friendly, with fair valuation processes for asset transactions, dispelling concerns about governance risks.
Catalyst Potential: The Greenberg family, holding a 40% stake, may pursue strategic actions (e.g., a sale or partnership with private equity) to address the REIT’s underperformance, unlocking value for shareholders.
Disclaimer: The information provided in this podcast is for informational purposes only and does not constitute financial, investment, or professional advice. The views expressed by the host and guests are their own and do not necessarily reflect the opinions of any organization or company. The host and guests may maintain positions in any securities discussed on the podcast. Always consult with a qualified financial advisor or professional before making any investment decisions.