One of the fun things about following the Canadian stock market is there are often opportunities to load up on fantastic stocks that many fellow investors have never heard of before.
Why do these great stocks fall through the cracks? I think one reason is because many Canadian investors focus their attention on U.S. companies, convinced the world’s largest economy is the only answer. There’s nothing wrong with stuffing your portfolio with U.S. stocks, but investors should also remember that there are great opportunities here in Canada as well.
Let’s take a closer look at one such opportunity, a company that has posted a compound annual growth rate of more than 17% over the last 20 years. Despite such a good performance, it’s doubtful many have even heard of this company.
A different kind of apartment owner
Led by CEO Bob Dhillon, Mainstreet Equity Corp (TSX:MEQ) takes a slightly different approach to buying apartments.
Most of Mainstreet’s competitors are only interested in larger assets, properties consisting of 50 or 100 units. This makes it efficient enough for them to insert a property manager without having to spend too much.
Mainstreet does things much differently. The company acquires smaller buildings, including properties with as few as a handful of units. Usually, these properties require some renovations to bring them up to a higher standard. Since it owns so many of these smaller buildings – which are strategically located close together – Mainstreet can create the same kind of efficiencies that way.
The reason why Dhillon and his team focus on this strategy is there are way more acquisition possibilities and, perhaps most importantly, more opportunities for the company to score a deal. Once one of these buildings is acquired – usually for far less than its replacement value – the property is renovated and then refinanced, extracting the equity which is then used for a down payment on the next deal. It’s a wonderful strategy that allows Mainstreet to grow without having to constantly go back to the capital markets.
The portfolio today consists of just over 13,000 apartments in 12 different Western Canadian cities. Approximately half of Mainstreet’s units are located in Calgary and Edmonton, with other major markets including Regina, Saskatoon, Surrey, and Abbotsford.
Mainstreet has been adding properties at a frenzied pace over the last few years, buying 601 units in 2017, 1,296 units in 2018, and a further 1,118 units in 2019. Weakness in the energy market has hit Western Canada hard, and Mainstreet is taking advantage to bolster its portfolio at bargain prices.
Another thing Mainstreet does a little differently is that it doesn’t pay a dividend. While this does alienate a certain number of potential investors, it gives the company a pretty unique structure. Long-term buy-and-hold investors can defer taxes for a number of years this way, which has a pretty compelling appeal.
And despite quietly being one of the TSX’s best long-term performers, Mainstreet shares are still attractively valued today. They continue to trade at a nice discount to management’s estimate of net asset value.
The company should also grow its funds from operations as properties that are being renovated get completed and start contributing to the bottom line. Additionally, it will also get a nice boost when the Alberta economy shakes off its current weakness and starts to grow again.
The bottom line
Despite posting excellent results for more than two decades now, it’s easy to see continued upside for Mainstreet Equity. The company still has loads of growth potential in Western Canada, and it could easily move into new markets, too. It’s the perfect stock to tuck away in your portfolio and forget about for a few years.
Amazon CEO Jeff Bezos recently warned investors that “Amazon will be disrupted one day” and eventually “will go bankrupt.”
What might be even more alarming is that Bezos has been dumping roughly $1 billion worth of Amazon stock every year…
But Bezos isn’t just cashing out, he’s reinvesting his money into a company utilizing a fast-emerging technology that he believes will “improve every business.”
In fact, this tech opportunity could be bigger than bigger than Amazon, Tesla, and Berkshire Hathaway combined.
Get the full scoop on this opportunity that has billionaire investors like Bezos convinced – before it’s too late…
Fool contributor Nelson Smith has no position in any of the stocks mentioned.
Real estate secrets; Family blindsided after others profit off obituary; CBC's Marketplace Cheat Sheet – CBC.ca
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Real estate agents caught on hidden camera breaking the law, steering buyers from low-commission homes
Marketplace’s latest investigation is uncovering some shady real estate practices.
Posing as homebuyers and sellers, Marketplace tested if real estate agents are engaging in steering, an anti-competitive practice that steers potential homebuyers away from properties that offer agents lower commission. The team’s hidden cameras found some agents deceiving the buyers they are supposed to represent in an effort to pad their own bottom line.
Experts and industry insiders say what Marketplace has uncovered is indicative of an industry working for the benefit of real estate agents at a cost to home sellers and buyers.
“There’s a huge inertia, and maintaining the status quo, it absolutely benefits existing realtors 100 per cent,” said broker and real estate agent Michael Walsh, one of the few speaking out on this issue.
After learning about our findings, the Real Estate Council of Ontario issued a notice about steering to more than 93,000 real estate agents, brokers and brokerages under its purview, noting that such behaviour breaches their code of ethics. Read more
Family blindsided after marketing company, funeral home cash in on father’s obituary
Before pancreatic cancer took his life in April, John Rothwell made his dying wishes clear: if mourners wanted to donate to a cause in his name, the money should go to an educational fund he and his family set up.
Instead, family and friends unwittingly paid for a product that puts money into the pockets of companies profiting from grief, says son Nathan Rothwell
Rothwell told Go Public that while he knew the obituary would be on the website of the Mackey Funeral Home in Lindsay, Ont., he made sure it included a request for mourners to consider donating to the educational fund, in lieu of flowers.
What no one told his family is that Frontrunner — a Kingston, Ont.-based marketing company that runs the funeral home’s website and many others across the country — uses obituaries to sell what it calls “memorial” trees and other products.
The obituary included links that said, “Plant a tree in the memory of John Rothwell” and led to a different website where mourners paid for products the family knew nothing about, said Rothwell.
“Family and friends spent money out of their own pockets for what they thought were my dad’s wishes,” Rothwell said.
After Rothwell complained and got a lawyer involved, Frontrunner doubled what mourners paid for the trees, and donated that money — more than $2,000 — to the educational fund. The company maintains that it did nothing wrong. Read more
The U.S. land border is reopening, but Canadians with mixed vaccines are still in limbo
While it’s welcome news that the U.S. will reopen its shared land border with Canada to non-essential travel on Nov. 8, some Canadians with mixed vaccine doses aren’t celebrating just yet.
That’s because at the same time the U.S. reopens the land border, it will start requiring that foreign land and air travellers entering the country be fully vaccinated.
The U.S. Centers for Disease Control (CDC) currently doesn’t recognize mixed COVID-19 vaccines — such as one dose of AstraZeneca and one dose of Pfizer or Moderna — and hasn’t yet said if travellers with two different doses will be blocked from entry when the vaccine requirement kicks in.
“CDC will release additional guidance and information as the travel requirements are finalized later this month,” spokesperson Jade Fulce said in an email on Wednesday. Read more
What else is going on?
What we know about kids and COVID-19 vaccines
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Zellers returns — kind of — but the lowest price isn’t quite the law
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Specialized Tarmac SL7 Bicycles recalled due to fall hazard
Consumers should immediately stop using the bicycles and contact an authorized Specialized retailer.
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This Week’s Top Stories: Canadian Real Estate Tops The List of Global Bubbles, and IMF Warns of Correction Risks – Better Dwelling
Real estate secrets – CBC.ca
Canada has among the highest real estate commission rates in the world.
Our investigation found real estate agents breaking the law by steering buyers from low-commission homes. Hidden cameras caught them in the act.
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