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Verisk Analytics is a great investment, this investor says – Cantech Letter

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Verisk Analytics

Verisk Analytics (Verisk Analytics Stock Quote, Chart, News, Analysts, Financials NASDAQ:VRSK) has come a long way in its ten-plus years as a public company, but investors shouldn’t be wary of those share price gains as this company has a huge runway ahead of it. So says portfolio manager Brett Girard of Liberty International Investment.

“I think Verisk is a great company to invest in,” says Girard, chief financial officer at Liberty, who spoke on BNN Bloomberg on Monday. “We bought this back in the beginning of 2019 and we continue to hold it to this day.”

New Jersey-based Verisk is in its 50th year as a predictive analytics business, with the company now boasting over 70 per cent of Fortune 100 companies using its solutions to handle risk assessment. The company has segments in Insurance, Energy and Specialized Markets and Financial Services, with its subscription-based services covering fields such as insurance underwriting and claims, fraud, regulatory compliance, natural resources, catastrophes, economic forecasting, geopolitical risks and ESG themes.

“They’re in the data analytic space, and what they’re doing is they’re helping the actuaries that work at insurance companies figure out how better to price risk. And that’s a really important thing going forward because in the past it’s sort of been statistical tables and a lot of work that was by hand or manually done within calculations of databases and things like that,” Girard said.

“But with Verisk, they’re really taking this to the next level and they’re using new technologies. They’re using artificial intelligence to sort through the big data and they’re doing a great job at it,” Girard said. “Not only do they have exposure to the insurance space but they’re also in the financial space and the oil and gas space.”

Verisk has seen its share price steadily head northwards over the past decade since a blockbuster IPO in 2009, going from $27 per share to as high as $207 by late last year. The stock finished 2020 up 39 per cent but is currently down 13 per cent for 2021.

But Girard sees more growth for the stock as Verisk rides the wave of digital transformation and AI-inspired analytics currently taking place across all industries.

“I think going forward, if you believe that having more data is going to allow companies and individuals to make better decisions, which we do, Verisk is a great way to play that,” Girard said.

“It’s something that you could hold onto for a long period of time, given the tailwinds of this big data migration that we’re seeing,” he said.

With the majority of its revenues coming from subscriptions and manifesting in long-term contracts, Verisk has sailed through the COVID-19 pandemic with relative ease. The company reported its fourth quarter and full year 2020 financials in February where it hit $713 million in Q4 revenue, up 5.4 per cent year-over-year, and $344.0 million in adjusted EBITDA, up 7.9 per cent year-over-year. (All figures in US dollars.)

Excluding items, the company’s fourth quarter adjusted earnings came to $1.27 per share whereas analysts had on average been expecting $1.30 per share.

The 2020 year saw revenues climb 6.8 per cent to $2.785 billion and adjusted EBITDA jump a full 12.4 per cent to $1.377 billion. By segment, Insurance revenue grew by 6.5 per cent over the year to $1.986 billion, Energy and Specialized Markets grew by 13.8 per cent to $641.6 million and Financial Services decreased by 12.0 per cent to $156.7 million. The drop in Financial Services revenue was attributed to pandemic-related lower levels of project spend by Verisk’s bank customers.

“Despite the broader economic challenges the pandemic continues to present, Verisk delivered another year of strong organic constant currency revenue and adjusted EBITDA growth in 2020,” said president and CEO Scott Stephenson in a February 23 press release.

“These results demonstrate the resiliency and stability of our business model, the valuable impact of our technology and insights to customers, and the commitment of our more than 9,000 Verisk teammates to support our customers through an unprecedented period of digital transformation,” Stephenson said.

This year’s pullback in Verisk has made for a buying opportunity, according to Deutsche Bank analyst Ashish Sabadra who in early March raised his rating from “Hold” to “Buy” on the stock with a $196 price target, which at the time of publication represented a projected 12-month return of 17 per cent.

Sabadra said now is an “attractive buying opportunity” on Verisk, which he said has a commanding market position in defensive end markets along with secular tailwinds in digitization.

On Monday, Morgan Stanley kept its “Overweight” rating on Verisk but dropped its target from $216 to $201, implying a 12-month return of 12.5 per cent.

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Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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