Stock Ideas - Mainstreet Eq J (MEQ - TSX)

Stock Ideas

This is not a  stock recommendation, it is an idea. Used chiefly for myself to keep track of information for future reference. An investor must always evaluate the price of the underlying asset before buying. The key question to ask is!...What is the intrinsic value of the business?

Mainstreet Eq J (MEQ - TSX)

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Profile

Mainstreet Equity Corp is a residential real estate company. It is focused on the acquisition, redevelopment, repositioning, and management of mid-market rental apartment buildings. The business specializes in multi-family residential housing operating in a single segment. Geographically it operates in Canadian provinces including British Columbia, Alberta, Saskatchewan and Manitoba. The company generates revenue from rental income and others.

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Comments from Stockchase

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Investor Insights

This summary was created by AI, based on 14 opinions in the last 12 months.

Mainstreet Equity Corp (MEQ-T) is a real estate corporation focused on managing small and mid-size apartment buildings in Western Canada. The company has experienced substantial growth in its number of apartments, units rented, and rental rates. It is led by an excellent CEO who owns half the business. The stock is well-regarded for its disciplined approach to portfolio growth and increasing net asset value. Analysts are optimistic about its potential for long-term compounding and consistent revenue growth. MEQ is considered a well-run, under-followed stock with strong potential for the future.

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It is under-followed since it hasn't raised money in over 20 years. It buys and manages small and mid-size apartment buildings in Western Canada. Its number of apartments has grown substantially and continues to grow. It has a record high number of units rented as well as record high rents. The CEO is excellent and owns half the business.

Jordan Zinberg, April 8, 2024

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Really likes it, though illiquid. Adept at growing portfolio base and NAV, despite not having to issue any equity, the holy grail of real estate. Really likes Canadian western apartment markets, especially where no rent control. Rents go higher, and so NAV goes higher.

Andrew Moffs, March 27, 2024

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Thinks highly of CEO. Great example of building a great business by investing in accretive acquisitions instead of paying out a distribution. Discount to NAV. Migration into Alberta is a great story. No dividend.

Andrew Moffs, November 30, 2023

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Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

MEQ operates as a real estate corporation focusing on managing residential rental apartments and is now trading at 27.6x times' Forward P/E, but only at 1.0x Book value. In the last five years, MEQ’s revenue growth has been quite consistent, around 12% on average. Like other real estate companies, the balance sheet is leveraged, with net debt of $1.5B. The net debt/EBITDA is currently around 14.5x. MEQ reinvested heavily into acquiring new properties. As a result, the company has had no dividend payments and limited shares repurchase over the last few years.

We think MEQ has the potential to be a compounder, trading at 1.0x Book value is also an attractive valuation, but the leverage levels need to be monitored carefully, as the debt is quite high. We would be comfortable with this name for a three-year+ timeframe given its cheap valuation and consistent revenue growth.

July 5, 2023

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Source

https://stockchase.com/company/view/2703/MEQ-T