NFI Group (NFI.TO), mcap=C$1bn, price C$13.18 vs C$13.30

– Canadian bus manufacturer.
– The company went from trading at 15x normalized EBITDA in 2018 to 5.5x today.
– In the near term facing supply chain challenges due to covid.
– Pent-up demand after 2 years of industry volumes at cyclical lows.
– Governments in the US, Canada, and the UK provide municipalities with record levels of funding to make diesel to electric transition.
– EVs have gone from 5% of the market in 2018 to >40% of the current bid universe.
– Industry shaping up to have the most positive demand backdrop in 30+ years.
– The competitive environment improved with effectively $BYD banned from the market and $PTRA diversifying away from transit buses.
– The CFO and NFI’s largest shareholders have been buying in the open market.

– At 10-12x mid-cycle FCF of C$2.65/share, NFI would be worth C$26-32.
– At peak FCF of C$3.80/share, would be C$38-C$46 stock.

Exp. gain: +100-140% to $26-32/share.

Full $NFI.TO write-up (free guest account required):

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