December’s Must-Watch Stocks: Andrey Omelchak’s Top Picks

Andrey Omelchak, the president and CIO of LionGuard Capital Management, has carved a niche as a specialist in identifying undervalued yet high-quality Canadian businesses. With a disciplined and strategic bottom-up investment approach, Omelchak’s methods focus on achieving long-term value while steering clear of the unpredictability associated with commodity markets. His latest top picks—Premium Brands Holdings, Badger Infrastructure Solutions, and Mattr Infrastructure—highlight his sharp focus on sectors primed for significant growth.

Market Outlook: Unlocking New Opportunities in a Changing U.S. Economy

The recent U.S. presidential election has provided clarity and stability, with Republicans now controlling the Presidency, Congress, and the House. This shift is expected to usher in an economic landscape that prioritizes deregulation, reduced taxes, and increased domestic investment. Such policies are projected to benefit sectors like infrastructure, technology, cybersecurity, and defense. These industries are not only critical for national security but also for sustaining economic competitiveness in a rapidly evolving global market.

Canadian stocks with substantial exposure to the U.S. market are uniquely positioned to thrive under these circumstances. They combine access to robust American economic activity with a degree of insulation from potential trade disruptions. Companies that align with these trends are poised to capitalize on predictable, long-term growth while minimizing risk.

Top Picks for December 2024

Premium Brands Holdings (PBH TSX)

Premium Brands Holdings is in the midst of a transformational growth phase. Over recent years, the company has invested significantly in new manufacturing capacities, setting the stage for higher profitability and substantial margin expansion. These investments are beginning to bear fruit, with EBITDA margins on new business expected to reach an impressive 30 percent. A key factor driving its future growth is the robust U.S. pipeline, which includes nearly $700 million in new client programs set to roll out in 2025. These programs are not just incremental; they are transformative, promising improved cash flows and reduced leverage over the next few years.

The current trading multiples of Premium Brands do not reflect the benefits of these developments. The company’s undervalued position in the market, combined with recent insider buying, underscores strong confidence in its future trajectory. With higher margins, reduced debt, and strategic investments coming to fruition, Premium Brands Holdings offers a compelling case for long-term growth.

Badger Infrastructure Solutions (BDGI TSX)

Badger Infrastructure Solutions stands out as a key beneficiary of the evolving U.S. economic landscape. Historically, election years have caused delays in project rollouts due to political uncertainty. With the elections settled, there is renewed activity in infrastructure investments, and Badger is well-positioned to take advantage of this momentum.

The company is benefiting from a significant uptick in demand across its core markets. This surge is driven by clients securing capacity in anticipation of increased U.S. infrastructure spending under the Republican administration. Badger also trades at a valuation that is significantly below its historical averages, making it an attractive opportunity for investors. Its expanded Normal Course Issuer Bid (NCIB) and ongoing buybacks reflect management’s confidence in its long-term growth prospects. These factors, combined with improving margins and a strong market position, make Badger a prime acquisition candidate for strategic buyers or private equity investors.

Mattr Infrastructure (MATR TSX)

Mattr Infrastructure has emerged as a standout growth story in the Canadian equities market. Under its leadership team, the company has successfully redefined its business through strategic acquisitions and high-return internal projects. A notable example is the new FlexPipe facility in Rockwall, Texas, which showcases Mattr’s scalable and low-cost expansion capabilities. This facility is strategically positioned to meet the rising demand for its products, particularly in sectors like energy infrastructure, transportation, and data centers.

Mattr’s recent acquisition of AmerCable has further enhanced its portfolio and strengthened its manufacturing footprint in North America. This acquisition was completed at an attractive multiple, providing substantial cross-selling opportunities that will drive growth in the coming years. The company’s disciplined investments and strong operational focus have positioned it to benefit from predictable economic trends, including increased U.S. infrastructure spending. Trading at low multiples, Mattr offers investors significant upside potential with numerous near-term catalysts.

LionGuard’s Strategy: A Blueprint for Long-Term Success

LionGuard Capital Management’s approach to investing is as disciplined as it is effective. By focusing on businesses with robust management teams and predictable growth trends, the firm has managed to navigate volatile market conditions while achieving sustainable value creation. This strategy is particularly relevant in the current economic environment, where long-term growth is tied to innovation-driven sectors and strategic infrastructure investments. Omelchak’s commitment to selecting resilient businesses ensures that LionGuard’s portfolio is well-positioned to deliver strong returns, regardless of market fluctuations.

Conclusion: A Focused Path to Value Creation

Andrey Omelchak’s top picks for December 2024—Premium Brands Holdings, Badger Infrastructure Solutions, and Mattr Infrastructure—reflect his sharp focus on sectors and companies poised for sustainable growth. These selections highlight opportunities in Canadian equities with significant U.S. exposure, capitalizing on predictable trends and a favorable economic backdrop. With a strategic, long-term approach, LionGuard Capital Management continues to set a high standard for disciplined and value-driven investing.