GAMBle on the Canadian!
Buy $GAMB & $CSIQ
This week we discussed in our WhatsApp daily chat (for reader supported (paid) subscribers) two new ideas long CSIQ (Canadian Solar) and GAMB (Gambling.com Group). I can recall my boss at the first hedge fund I worked saying “if you can’t do an elevator pitch on a stock, it is probably not going to work or is too complicated for the market to understand.” Equally, if you had a file on a company with a width greater than 3-4 inches wide, it probably was overkill and unlikely to work. This was not meant to say do less work or thinking, but rather have the ability to concisely and analytically process & communicate your thesis to yourself and others. Have your thesis, visualize how the story will evolve in the coming weeks, months or years along with what would change or derail your view. This is true for investments and trades. So, let’s do it today on CSIQ and GAMB!
CSIQ is a Chinese solar panel company with sales over $9 billion annually and gross profit margins (module price less poly silicon costs and overhead) in the 15% range heading north above 20% given stable to slight declines in module prices with a collapse in the past 6 months for poly, the main input cost. The stock trades at an EV/EBITDA of 6-7x, very low given the strong growth and expanding margins. Part of the low valuation is the ”Chinese” discount many US traded stocks receive with occasional geopolitical and accounting concerns. Remember Didi, the ride hailing IPO debacle in the US? Or the Luckin Coffee the Chinese fraud that got delisted? It happens, thankfully, un-often to Chinese foreign issuers. CSIQ has been operating for decades, audited and “verified” by the markets as much as a Chinese stock reasonably can be. There is nothing unusual, fanciful (such as margins that are hard to explain versus peers) to say anything besides CSIQ is a global leader in the solar market with cost advantages. Ok, why own this stock?
Side note:. If you read this far, isn’t it time to convert your account to a reader supported subscription? All proceeds go to charity annually.