Topic: How To Invest

Q: Pat, Hello. If this request fits with your Inner Circle letter objective could I have your opinion on Mainstreet Equity Corp.? Thank you for your time.

Article Excerpt

A: Mainstreet Equity Corp., $64.36, symbol MEQ on Toronto (Shares outstanding: 9.4 million; Market cap: $603.8 million; www.mainst.biz), owns 326 properties with a total of 12,333 apartment units, mainly in Western Canada. In the three months ended June 30, 2019, the company’s revenue rose 18.4%, to $34.7 million from $29.3 million a year earlier. Cash flow per share gained 20.7%, to $0.99 from $0.82. Lower vacancy rates and higher rents drove the gains. The company faces an uncertain economic outlook in Alberta and Saskatchewan, which together account for 78% of its rental portfolio. It aims to take advantage of the weakness in those markets to buy distressed properties. Mainstreet also plans to boost its profits by buying buildings it can fix up, making their units more attractive and introducing higher rents. But that can add short-term risk, because the renovations temporarily raise the company’s vacancy rate and hurt its cash flow. Global oil prices have strengthened lately, but remain volatile in Western Canada amid a..