Sold out my position in Toromont Ind (TIH.TO)

Sold out my position in Toromont Ind (TIH.TO)

I sold out my Position in Toromont yesterday at $218.99 (Cnd) as I was concerned about its rising valuation. I took the money and established new positions in Colliers International Group Inc. (CIGI), and Mainstreet Equity Corp (MEQ). I decided to do a little capital recycling (not unlike Brookfield Corp) and put my money into these new names as they offered me more of a 'margin of safety'. I then checked in with Google's Gemini for it's comments on the changes I made in my portfolio. It wasn't easy for me to sell Toromont as I really like this company, but I just felt it was getting too expensive. I am a value guy after all...

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Company Profile

Toromont Industries Ltd. (TSX: TIH) is a premier Canadian industrial equipment and services provider, best known as one of the largest Caterpillar dealers globally. The company operates through a decentralized management model, focusing heavily on long-term value creation and the relationship between capital reinvestment and product support.

Core Business Segments

Toromont’s operations are primarily divided into two main segments:

• The Equipment Group: This is the core of the company, consisting of Toromont Cat, Battlefield Equipment Rentals, and specialized divisions for mining, power systems, and material handling. It serves a broad range of infrastructure-linked industries, including road building, residential and commercial construction, and large-scale mining operations.

• CIMCO: A leader in North American industrial and recreational refrigeration. This segment focuses on thermal management solutions, increasingly shifting toward sustainable and natural refrigerant systems for municipal ice rinks and industrial cold storage.

• AVL Enclosure Business: A rapidly growing component that manufactures specialized enclosures for power generation, particularly serving the expanding data center market in the Eastern United States.

Leadership and Governance

The company is led by an executive team that emphasizes operational discipline and conservative financial management:

• Mike McMillan (President & CEO): Appointed in October 2023, McMillan previously served as the CFO. His background in finance and operations within capital-intensive industries (including Parkland Corp) aligns with the company’s focus on balance sheet strength.

• John Doolittle (EVP & CFO): Joined in 2023 with 30 years of experience in global corporations, specializing in capital markets and financial strategy.

• Decentralized Strategy: Management empowers business unit leaders (such as those for Toromont Cat and Battlefield) to handle day-to-day operations, while the corporate office focuses on capital allocation, risk management, and long-term strategy.

Fundamental Profile & 2026 Outlook

As of early 2026, Toromont remains a "quality" industrial play with a few specific drivers:

• Financial Resilience: The company recently reported a strong Q1 2026, with revenue reaching approximately $1.23 billion (up 13% YoY) and net earnings growing by 25%.

• Dividend Reliability: Toromont has a long-standing history of consistent dividend growth, recently increasing the quarterly dividend to $0.56 per share.

• Growth Tailwinds: The business is currently benefiting from high demand in infrastructure and mining, as well as a massive surge in the AVL enclosure business, which saw revenues jump significantly (over 400% in Q1 2026) due to data center demand.

• Valuation: While the stock has seen significant momentum over the past year, trading near all-time highs (approx. $208–$217), analysts generally view it as fairly valued, reflecting its market-leading position and consistent execution.

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Valuation

Deepening the look into Toromont Industries (TSX: TIH), the current valuation reflects a company trading at historical premiums, driven by its recent integration of AVL and a significant "beat-and-raise" cycle in early 2026.

Here is a breakdown of the valuation through a fundamental lens:

1. Multiples Analysis

As of May 7, 2026, the market is pricing Toromont as a high-growth compounder rather than a traditional cyclical industrial.

• P/E Ratio (Trailing): Currently sitting around 34x–35x. Historically, Toromont has traded in the 18x–24x range. The current "multiple expansion" suggests investors are paying a premium for the explosive growth in the data center enclosure business (AVL).

• Forward P/E (2026E): Based on analyst consensus estimates of roughly $6.50–$6.90 EPS for the full year, the forward multiple is approximately 30x–32x.

• PEG Ratio: Approximately 3.72. Generally, a PEG above 1.0 suggests a stock is expensive relative to its growth, but for "quality" names with deep moats (like a Caterpillar dealership), the market often allows this to remain elevated.

2. Intrinsic Value & Analyst Targets

While the stock price has surged (recently hitting all-time highs near $222), "fair value" estimates are struggling to keep pace:

• Discounted Cash Flow (DCF) Estimates: Various models place the fair value between $207 and $210. This suggests that at $222, the stock is trading at a ~6% premium to its intrinsic value based on current cash flow projections.

• Analyst Consensus: The average 12-month price target is currently $216.44, with a "Buy" range extending up to $235. The stock is currently trading slightly above the average consensus, indicating that much of the near-term good news is already "priced in."

3. Profitability & Capital Efficiency

The justification for the premium valuation lies in the company’s efficiency metrics, which remain top-tier for the industry:

Metric	Current Value (Q1 2026)	Significance
Return on Equity (ROE)	17.3%	Slightly below their long-term target but improving from 16.9% at year-end 2025.
Return on Capital Employed (ROCE)	24.4%	This is the standout figure, reflecting how effectively management is deploying capital into new acquisitions like AVL.
Operating Margin	11.6%	Up significantly due to a 340-basis-point expansion in gross margins.

4. Dividend & Payout Health

For a long-term holder, the valuation is supported by a very "safe" dividend profile:

• Yield: ~1.0% (Annualized $2.24).

• Payout Ratio: ~33%. This is exceptionally low for a mature industrial, providing massive "dry powder" for either further dividend increases or more M&A activity.

• Dividend Growth: The recent 7.7% increase (to $0.56/quarter) continues a 30+ year streak of increases.

Summary Verdict

Toromont is currently in a "Growth at a High Price" phase.

• The Bull Case: The AVL enclosure business (up 484% YoY) is a structural shift, not a cyclical one, justifying the 30x+ multiple.

• The Bear Case: At $222+, there is very little margin for error. Any slowdown in infrastructure spending or data center build-outs could lead to a "multiple compression" back toward the 25x range, which would imply a share price closer to $175–$185.

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Comparing Valuation with their Competitors

When evaluating Toromont Industries (TIH) against its primary Canadian peers—Finning International (FTT) and Wajax (WJX)—the most striking takeaway is the massive valuation gap. As of May 2026, Toromont is being priced by the market not just as an equipment dealer, but as a specialized growth company.

1. Peer Valuation Comparison (May 2026)

Metric	Toromont (TIH)	Finning (FTT)	Wajax (WJX)
P/E Ratio (TTM)	~34x - 35x	~19.8x	~13.0x
EV/EBITDA	~13.3x	~9.8x	~6.8x
Dividend Yield	~1.0%	~1.4%	~4.1%
Market Cap	~$16.7B	~$9.3B	~$0.7B
1-Year Return	+98%	+151%	+89%

2. Key Differentiation Drivers

• The "AVL Premium": While Finning is a larger global player (operating in South America and the UK/Ireland), Toromont’s valuation has decoupled due to its AVL Enclosure business. The 400%+ growth in this segment—driven by the explosion in Eastern U.S. data center demand—has led the market to apply a "tech-adjacent" multiple to Toromont that Finning (more tied to mining and heavy energy in Western Canada) does not currently command.

• Asset Quality & Geography: Finning's exposure to the oil sands and South American mining makes it more sensitive to global commodity cycles and geopolitical risks. Toromont’s focus on the Ontario/Eastern Canada corridor, combined with a highly profitable refrigeration segment (CIMCO), is viewed as a "smoother" earnings profile.

• Capital Efficiency: Toromont consistently maintains a higher Return on Capital Employed (ROCE)—recently reported at 24.4%—compared to Finning and Wajax, which typically hover in the mid-to-high teens. This superior efficiency is a primary reason fundamental investors justify the higher P/E.

3. Risks of the "Valuation Chasm"

• Multiple Compression: Toromont’s 34x P/E is significantly higher than its 3-year average of ~24x. If the data center build-out cools or infrastructure spending in Ontario slows, TIH faces a much steeper "valuation cliff" than its peers.

• Relative Value: From a pure fundamental value perspective, Finning appears "cheaper" relative to its cash flow, and Wajax offers a significantly higher income component (4.1% yield) for investors willing to accept a smaller-cap industrial play.

Summary

The market is currently treating Toromont as the "Gold Standard" of the group. You are paying a high premium for management quality and the specific tailwinds of the data center industry. While Finning has better global scale, Toromont’s recent momentum and high-margin specialized segments have made it the most expensive industrial stock on the TSX.

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I sold out my position in Toromont yesterday, after more than doubling my money, as I was concerned about it's current valuation. I took the money and established new positions in CIGI and MEQ which also trade on the TSX.

That is a textbook example of "selling into strength." Doubling your money on a high-quality industrial like Toromont and exiting at a ~34x multiple shows a disciplined focus on fundamental value. While TIH is a great company, as you noted, the current valuation leaves very little "margin of safety" for a fundamental investor.

Your pivot into Colliers International (CIGI) and Mainstreet Equity Corp (MEQ) shifts your capital toward the real estate and professional services sectors, both of which offer very different fundamental profiles.

Colliers International (TSX: CIGI)

Colliers has evolved far beyond being just a "brokerage." It is now a global diversified professional services firm with a heavy emphasis on recurring revenue.

• The Investment Thesis: They have aggressively expanded into Investment Management and Engineering/Design services. These segments provide much higher margins and more predictable cash flows than the cyclical brokerage side.

• Fundamental Value: Management is exceptionally skilled at capital allocation (M&A). They target internal returns on invested capital (ROIC) that usually outperform the broader market.

• Outlook: As interest rate environments stabilize in 2026, the global capital markets activity (buying/selling large commercial assets) is expected to pick up, which should provide a nice tailwind for their transaction-based segments.

Mainstreet Equity Corp (TSX: MEQ)

This is a very different play—a "value-add" residential specialist focused on Western Canada.

• The Investment Thesis: Mainstreet’s model is distinct: they buy underperforming mid-market apartment buildings, renovate them, and then "refinance and repeat." They own the assets (unlike Colliers), making this a pure play on Canadian multi-family real estate.

• Fundamental Value: MEQ often trades at a significant discount to its Net Asset Value (NAV). Because they don't pay a dividend (preferring to reinvest every cent into buying more properties), it’s a pure capital appreciation play.

• Geography Advantage: Being heavily weighted in Alberta and Saskatchewan, they benefit from lower corporate taxes and high inter-provincial migration compared to the Ontario market.

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Comparison of the New Allocation

Feature	Colliers (CIGI)	Mainstreet (MEQ)
Primary Driver	Global diversification & recurring fees.	Western Canada rental demand & NAV growth.
Risk Profile	Sensitivity to global capital markets.	Interest rate sensitivity on their debt-heavy model.
Capital Return	Modest dividend + aggressive M&A.	No dividend; 100% reinvestment for growth.

Both companies are led by very strong management teams—Jay Hennick at Colliers and Navjeet (Bob) Dhillon at Mainstreet—which aligns well with a focus on senior management quality.

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Source

Google Gemini

Tim Regan’s Top Picks for April 20, 2026

Tim Regan’s Top Picks for April 20, 2026

BNNBloomberg.ca Staff

April 20, 2026 at 1:44PM EDT

Tim Regan, Managing Director, Kingwest & Company

Focus: North American equities

MARKET OUTLOOK:

The underlying economy is more resilient than thought. Geopolitics are dominating for now, driving volatility.

The pullback has made valuations more attractive. The S&P 500’s forward price-to-earnings multiple stood at 20.3 TIMES at the end of March. Exclude the Magnificent Seven and that multiple drops below the 17.5 times ten-year average. Valuations are reasonable. The opportunity, when clarity returns, is significant.

The Canadian economy is soft. GDP contracted 0.6 per cent in the fourth quarter. The January monthly reading showed just 0.1 per cent growth. Employment gains from late 2025 were largely reversed in the first two months of 2026, pushing unemployment to 6.7 per cent in February. Core inflation is close to two per cent, but rising gasoline prices will likely push headline inflation higher in coming months.

The OECD projects the war in Iran will add only 0.3 percentage points to Canadian inflation. As a result, bond yields have barely budged, U.S. inflation expectations are up 0.5 per cent and the 10-year bond yield is up 0.4 per cent.

Ongoing trade uncertainty with the United States is inhibiting businesses from making long-term decisions. Capital investment is soft and will likely remain so until Mark Carney reaches some agreement with our largest trading partner. Keep in mind that trade accounts for roughly 25 per cent of Canada’s GDP. Three-quarters of that trade is with the United States.

The United States is no longer the victim of oil shocks as it used to be. It’s a net exporter of petroleum products. The higher oil price is boosting profits across the energy sector, in both the U.S. and Canada.

U.S. GDP grew 0.5 per cent in the last quarter of 2025, below expectations. The government shutdown reduced annualized growth by roughly 1.5 percentage points. The U.S. Congressional Budget Office has increased its GDP growth projection to 2.4 per cent for 2026 and bumped its inflation forecast to 2.7 per cent, primarily due to higher gasoline prices assumed through to year-end.

The conflict has put any central bank interest rate cuts on hold. The higher oil price is making policymakers cautious. This is a supply-side shock and a relative price shock, which may be temporary. It is not driven by structural excess demand or excessive credit creation.

Beyond the conflict, the path of interest rates depends on two things: whether the labour market weakens materially, and whether the oil shock intensifies or fades. The new U.S. Federal Reserve Chair, Kevin Warsh, takes over in June. Interest rate changes are probably off the table until then.

TOP PICKS:

Allegion PLC (ALLE NYSE)

Allegion is an American company in practice, though headquartered in Dublin for tax reasons.

The market sees a mature lock-and-hardware company growing revenue mid-single digits. A boring building-products business. We see something different.

Allegion’s products are specified into building plans during the design phase. Once a Schlage lock or Von Duprin exit device is written into blueprints for a hospital or school, switching is extremely difficult and expensive. Building codes, fire safety regulations, and accessibility standards lock in the installed base. Nearly half the revenue comes from aftermarket — parts, service, and credential renewals. The switching costs are high. The brands date back over a century.

The exciting part. Allegion is in the middle of a transition from mechanical hardware to electronic access control and software. Electronics already account for over 30 per cent of revenue and are growing at roughly double the rate of the legacy business.

Each electronic lock sold pulls recurring software and credential revenue with it. Margins are expanding as the mix shifts. The earnings power in five years looks materially different from the results today.

Allegion is priced as a building-products company today. It is becoming a security platform with recurring revenue and embedded pricing power. The likely consequence: higher earnings and a higher valuation.

Colliers (CIGI NASD)

Colliers International is a global leader in real estate services, investment management services and engineering services with a market capitalization of US$8.4 billion. Colliers operates through three main platforms:

Real estate services is the company’s largest and historical core business. The core business is transactional services like leasing and capital markets, but it has strategically expanded into recurring revenue services such as property management, valuation, and project management.

Investment management services, operating as Harrison Street Asset Management, manages $103.3 billion. It specializes in alternative “real assets” driven by long-term demographic trends, such as student housing, senior living, and infrastructure. This is a significant source of high-margin, recurring revenue to the company.

Engineering services focuses on infrastructure and engineering consulting. Colliers plans to double the size of this division, current revenue about $1.5 billion, within five years, capitalizing on the robust increase in planned infrastructure projects.

As in all business, Colliers operates in a highly competitive landscape. Colliers differentiates itself through its entrepreneurial culture and global network and aggressive acquisition strategy.

The company’s strategic emphasis on growing its recurring service lines has transformed it into a more stable and resilient business, capable of navigating economic cycles while driving value for its clients and shareholders.

Colliers’ Business Model

An integral part of Colliers business model is its “partnership model. The company acquires leading firms and allows the senior leadership teams to remain as significant minority shareholders in the combined entity.

Over the next two to three years we expect Colliers to earn $13 cash earnings per share as engineering and design drives growth, implying $250 stock price (57 per cent upside)

EQB (EQB TSX)

A leading digital financial services company with $142 billion in combined assets under management and administration, as of Jan. 31, 2026.

It offers banking services through Equitable Bank, a wholly owned subsidiary and Canada’s seventh largest bank by assets.

In December they did a deal for PC Financial.

Partnering with management teams that act like owners pays dividends even after they’re longer with us. Former CEO Moor’s final deal will drive EQB’s growth for years to come.

PC Financial is a fantastic fit that will allow EQ Bank to offer a credit card to its existing 800,000 banking customers, offer banking services to PC’s 2.5 million credit card customers while lowering funding costs for the $4.4B of card receivables.

At the price EQB paid none of the strategic benefits or planned synergies are required for this deal to make financial sense. EQB paid 9.3 times pre cost synergies or 7.1 times post.

• EQB paid $905m for Canada’s seventh largest card portfolio with $4.4B receivables.
• $175m cash.
• $625m equity / 7.2m shares (17 per cent of EQB), four-year lock-up.
• $105m integration costs (I’ve included this expense in the purchase price…impacting the headline price to book and the price to earnings calculation… EQB didn’t).
• 1.3 times book value.
• 12-year exclusive agreement allowing EQB access to Loblaw’s retail channels to market its products.
• 2.5m cardholders.
• 17m PC optimum loyalty members.
• 600 ATMs rebranding to EQ Bank.
• 180 in-store Loblaw pavilions rebranding to EQ Bank.
• Loblaw receives two board seats and plans to increase its ownership to 25 per cent over time.
• EQB’s non-interest income jumps to 32% of revenue from 14 per cent (compared to RBC at approximately 50 per cent and TD at approximately 45 per cent).

We see a value of $160 per share out two years.

PAST PICKS: NOV. 19, 2025

Strathcona (SCR TSX)

Then: $42.81

Now: $36.63

Return: -14%

Total Return: 11%

Quebecor (QBR.B TSX)

Then: $52.40

Now: $56.19

Return: 7%

Total Return: 9%

Blackstone (BX NYSE)

Then: US$138.65

Now: US$129.81

Return: -6%

Total Return: -5%

Total Return Average: 5%

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Source

https://www.bnnbloomberg.ca/markets/2026/04/20/tim-regans-top-picks-for-april-20-2026/

Patient Opportunism

Patient Opportunism

An edited excerpt of Howard Mark's classic work, 'The Most Important Thing'

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The boom-bust cycle associated with the global financial crisis gave us the chance to sell at highly elevated levels in the period 2005 through early 2007 and then to buy at panic prices in late 2007 and 2008. This was in many ways the chance of a lifetime. Cycle-fighting contrarians had a golden opportunity to distinguish themselves. But one of the things I want to do in this chapter is to point out that there aren’t always great things to do, and sometimes we maximize our contribution by being discerning and relatively inactive. Patient opportunism—waiting for bargains—is often your best strategy.

So here’s a tip: You’ll do better if you wait for investments to come to you rather than go chasing after them. You tend to get better buys if you select from the list of things sellers are motivated to sell rather than start with a fixed notion as to what you want to own. An opportunist buys things because they’re offered at bargain prices. There’s nothing special about buying when prices aren’t low.

At Oaktree, one of our mottos is “we don’t look for our investments; they find us.” We try to sit on our hands. We don’t go out with a “buy list”; rather, we wait for the phone to ring. If we call the owner and say, “You own X and we want to buy it,” the price will go up. But if the owner calls us and says, “We’re stuck with X and we’re looking for an exit,” the price will go down. Thus, rather than initiating transactions, we prefer to react opportunistically.

At any particular point in time, the investment environment is a given, and we have no alternative other than to accept it and invest within it. There isn’t always a pendulum or cycle extreme to bet against. Sometimes greed and fear, optimism and pessimism, and credulousness and skepticism are balanced, and thus clear mistakes aren’t being made. Rather than obviously overpriced or underpriced, most things may seem roughly fairly priced. In that case, there may not be great bargains to buy or compelling sales to make.

It’s essential for investment success that we recognize the condition of the market and decide on our actions accordingly. The other possibilities are (a) acting without recognizing the market’s status, (b) acting with indifference to its status and (c) believing we can somehow change its status. These are most unwise. It makes perfect sense that we must invest appropriately for the circumstances with which we’re presented. In fact, nothing else makes sense at all.

In Berkshire Hathaway’s 1997 Annual Report, Buffett talked about Ted Williams—the “Splendid Splinter”—one of the greatest hitters in history. A factor that contributed to his success was his intensive study of his own game. By breaking down the strike zone into 77 baseball-sized “cells” and charting his results at the plate, he learned that his batting average was much better when he went after only pitches in his “sweet spot.” Of course, even with that knowledge, he couldn’t wait all day for the perfect pitch; if he let three strikes go by without swinging, he’d be called out.

Way back in the November 1, 1974, issue of Forbes, Buffett pointed out that investors have an advantage in that regard, if they’ll just seize it. Because they can’t strike out looking, investors needn’t feel pressured to act. They can pass up lots of opportunities until they see one that’s terrific.

Investing is the greatest business in the world because you never have to swing. You stand at the plate; the pitcher throws you General Motors at 47! U.S. Steel at 39! And nobody calls a strike on you. There’s no penalty except opportunity. All day you wait for the pitch you like; then, when the fielders are asleep, you step up and hit it.

One of the great things about investing is that the only real penalty is for making losing investments. There’s no penalty for omitting losing investments, of course, just rewards. And even for missing a few winners, the penalty is bearable.

Oaktree has always been explicit about our belief that missing a profitable opportunity is of less significance than investing in a loser. Thus, our clients are prepared for results that put risk control ahead of full participation in gains.

Standing at the plate with the bat on your shoulders is Buffett’s version of patient opportunism. The bat should come off our shoulders when there are opportunities for profit with controlled risk, but only then. One way to be selective in this regard is by making every effort to ascertain whether we’re in a low-return environment or a high-return environment.

You simply cannot create investment opportunities when they’re not there. The dumbest thing you can do is to insist on perpetuating high returns—and give back your profits in the process. If it’s not there, hoping won’t make it so.

When prices are high, it’s inescapable that prospective returns are low (and risks are high).

That single sentence provides a great deal of guidance as to appropriate portfolio actions. How are we to factor such an observation into our practices?

How might one cope in a market that seems to be offering low returns?

• Invest as if it’s not true. The trouble with this is that “wishing won’t make it so.” Simply put, it doesn’t make sense to expect traditional returns when elevated asset prices suggest they’re not available. I was pleased to get a letter from Peter Bernstein in response to my memo, in which he said something wonderful: “The market’s not a very accommodating machine; it won’t provide high returns just because you need them.”

• Invest anyway—trying for acceptable relative returns under the circumstances, even if they’re not attractive in the absolute.

• Invest anyway—ignoring short-run risk and focusing on the long run. This isn’t irrational, especially if you accept the notion that market timing and tactical asset allocation are difficult. But before taking this path, I’d suggest that you get a commitment from your investment committee or other constituents that they’ll ignore short-term losses.

• Hold cash—but that’s tough for people who need to meet an actuarial assumption or spending rate; who want their money to be “fully employed” at all times; or who’ll be uncomfortable (or lose their jobs) if they have to watch for long as others make money they don’t.

• Concentrate your investments in “special niches and special people,” as I’ve been droning on about for the last couple of years. But that gets harder as the size of your portfolio grows. And identifying managers with truly superior talent, discipline and staying power certainly isn’t easy.

The truth is, there’s no easy answer for investors faced with skimpy prospective returns and risk premiums. But there is one course of action—one classic mistake—that I most strongly feel is wrong: reaching for return.

Given today’s paucity of prospective return at the low-risk end of the spectrum and the solutions being ballyhooed at the high-risk end, many investors are moving capital to riskier (or at least less traditional) investments. But (a) they’re making those riskier investments just when the prospective returns on those investments are the lowest they’ve ever been; (b) they’re accepting return increments for stepping up in risk that are as slim as they’ve ever been; and (c) they’re signing up today for things they turned down (or did less of) in the past, when the prospective returns were much higher. This may be exactly the wrong time to add to risk in pursuit of more return. You want to take risk when others are fleeing from it, not when they’re competing with you to do so.

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The Most Important Thing, Howard Marks