Cervus Equipment

Cervus Equipment  -  CERV  .  TSX

This is what I thought in March 2018 when I first bought the stock...

Cervus operates a chain of farm equipment dealerships spread across western Canada. They also own a similar chain in Australia and New Zealand. Additionally, they operate a trucking division in Ontario which sells Peterbilt trucks.

I think this company looks like a solid, long-term holding. The price is depressed right now, after several years of weak earnings, a difficult industry environment, disadvantageous exchange rates and a difficult acquisition in the transport sector. A binge of farm equipment buying in the early 2010's led to a hangover that lasted several years and has dragged down sales and profitability in the sector. But the outlook going forward looks more promising to me. Many of the headwinds the company has faced over the last few years may abate or stabilize. At the current share price of $14.34, I can buy the company for a reasonable p:e of 10.4 based on the current earnings profile. And if growth were to accelerate from here, that would simply be icing on the cake.