We regularly review ATS Automation Tooling Systems on The Back Page. Since we published our July 5 issue, its shares have jumped by 32.2 per cent. That’s likely due to its growing profits. ATS remains a buy for further long-term gains, provided that you need no dividends.
ATS provides custom-designed, built and installed manufacturing products for companies worldwide.
In fiscal 2014, ATS’s earnings are expected to rise by nearly 35 per cent to 62 cents a share (fiscal years end March 31). In fiscal 2015, the company’s earnings are expected to increase by more than 25 per cent, to 84 cents a share. Based on this estimate, ATS’s price-to-earnings ratio is a more reasonable 17.3 times.
One step ATS has taken to keep its risk down is to carry no debt. ATS is also safer thanks to its diversification. First, it serves companies worldwide. This reduces its exposure to troubled economies such as, say, the Euro-zone. Second, ATS serves customers in the sciences, computer, electronics, energy, consumer and transportation industries. This reduces its exposure to a downturn in any one industry.
ATS’s management owns 38.5 per cent of the shares. So it’s in their interests that the company do well.
ATS remains a buy for further long-term gains if you need no dividends.
TSX—ATA; Rating: Higher Risk; Sector: Manufacturing; Dividend:—; Yield:—; O/S shares: 88 million; MRI:—; MGI:—; Five-year return: 117%; 52-week range: $15.45—$7.70; Net debt: 0; ROE: 12.8%; Directors own: 38.5%; T: 519-653-6500; www.atsautomation.com.