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Why Indigo (TSX:IDG), Cascades (TSX:CAS), & Canfor (TSX:CFP) Shares Raced Higher Wednesday

Will Ashworth | June 13, 2019| More on:

Image source: Getty Images

While the TSX is down slightly Wednesday on lower energy prices, three stocks are racing higher due to positive news about each business.

Should you be interested in any of them? Here’s what we know so far.

Indigo Books & Music

Indigo Books & Music (TSX:IDG), the Toronto-based book and general merchandise chain, jumped more than 7% on speculation that it could be the next company to be taken private.   

Although rumours haven’t surfaced about possible interest in Indigo, former portfolio manager Bob Tattersall wrote an article in the Globe and Mail Wednesday wondering if CEO Reisman and Husband Gerry Schwartz, who owns 58% of the voting stock, would be interested in taking the retailer private.

Recently, New York-based hedge fund Elliott Management made an offer to take Barnes & Noble private.

Indigo, which has no debt and $128 million in cash, would be very attractive to private equity buyers who would be getting a well-known Canadian name for 2.5 times cash flow, about half what Elliott Management is paying for Barnes & Noble.

The smart money says a deal will happen.

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Cascades

As I write this with less than an hour left in Wednesday’s trading, Cascades (TSX:CAS) stock is up by almost 14% on the day.

What’s up with the double-digit move?

Well, to start, TD Securities analyst Sean Steuart raised Cascades stock from “hold” to “buy” Wednesday while also raising his price target to $11.50 — 4.5% above the previous target and $0.25 higher than the average analysts’ price.

Other than the analyst upgrade, there doesn’t appear to be anything else fueling its rise on the day.

Canfor

Canfor (TSX:CFP), one of the largest producers of sustainable lumber and pulp and paper announced that it is significantly curtailing production capacity at its B.C. sawmills. The cuts in production will last from two weeks at a majority of its mills to six weeks at its mill in Mackenzie, B.C.

The lumber markets at the moment combined with the high cost of fibre have made its B.C. mills unprofitable to operate. The cuts in production will reduce Canfor’s production output by 200 million board feet out of a total capacity of 3.6 billion.

Canfor’s stock is up almost 8% on the news.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Will Ashworth has no position in any stocks mentioned.

 

 

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