WATCH: U.S. and Canadian stock markets are at all-time highs, but veteran hedge fund manager JF Tardif of Timelo Investment Management is staying cautious. In this episode of In the Money with Amber Kanwar, he breaks down why he’s keeping his portfolio defensive and where he still sees overlooked upside.
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1. Total Energy Services (TSE: TOT)
- LNG-Driven Growth: Total Energy Services is positioned to capitalize on the booming global LNG market, particularly in Canada, where LNG exports are ramping up from 2 BCF/day to a potential 4-10 BCF/day over the next decade. The company’s compression and drilling services are in high demand as Canada’s gas sector heats up.
- Undervalued Small-Cap Opportunity: Despite a 20% rise in recent months, the stock remains below last year’s highs and trades at a low 2-3x EBITDA, suggesting the LNG growth story isn’t fully priced in. JF sees significant upside as investor awareness grows.
- Long-Term Potential: With expected earnings of $2/share and the possibility of doubling its business in 5-10 years, JF forecasts a potential stock price of $40 (from ~$10-11 now), offering over 250% upside if the LNG and Canadian energy production boom materializes.
2. Calian Group (TSE: CGY)
- Defense Sector Tailwinds: Calian Group is a prime beneficiary of Canada’s planned increase in military spending, potentially tripling from 1% to 3-5% of GDP. Their staffing and training contracts with the Canadian military position them for substantial growth.
- Low Valuation, High Upside: Trading at just 10x earnings with minimal debt, the stock is undervalued relative to its growth potential. Recent contracts with the Canadian military further strengthen its outlook, yet the stock hasn’t broken out above $50-53, offering a compelling entry point.
- Small-Cap Momentum Potential: Despite recent disappointments in U.S. operations, JF believes improving quarters could ignite momentum, driving the stock higher as investors recognize its defense and tech exposure. A tripled military business could push the stock significantly beyond its current ~$50 price.
3. H&R REIT (TSE: HR.UN)
- Strategic Sale Catalyst: H&R REIT is in the spotlight with a potential sale driven by shareholder pressure and interest from major players like Blackstone, who’ve made a formal offer. JF believes a deal is highly likely, with a sale price potentially between $13-17 (from ~$12 now), offering 8-40% upside.
- Diversified Portfolio: H&R’s assets span retail, office, apartments, and industrial properties, providing multiple avenues for value creation through a full or partial sale. The industrial and apartment segments are particularly strong, offsetting weaker office exposure.
- Activist-Driven Opportunity: With activist hedge fund K2 pushing for maximized value, JF is confident that shareholder demand will force management to act, making H&R a unique M&A play in the real estate sector with limited downside and significant near-term potential.
