Monthly Message

The Wutherich & Co. Composite was down 2.4% in August. This compares with the S&P/TSX being down 1.4%.

As we had mentioned last month, most of our companies reported their most recent quarters during August. We had a high level of conviction that most would continue to demonstrate the ongoing strength of their businesses. This proved to be the case in spades! In general, the numbers were great with only a few mild disappointments.

Operations at all our companies continue to be strong or very strong. Take Hibbett, Inc (HIBB-Q). As many of you know we have owned this stock off and on over the last 22 years. The company is an athletic wear/sporting goods retailer. The stock is trading at about half its price of 2 years ago after having quadrupled over the 2 years prior to that. Why the roller-coaster ride? The company initially benefitted from pandemic spending as people, flush with government cheques, sought ways to spend their time during the various lockdowns. Earnings went from $1.52 per share in 2019 to $11.16 in 2021! That spending has since come off as the world has largely normalized, bringing the stock down with it. They are still expected to earn $7.00 per share this year and are likely to grow earnings for many years to come. Clearly, the company has changed dramatically, and permanently, over the last four years and is now stronger than it has ever been. However, it is trading at half its pre-pandemic multiples. While the general health of the consumer is a concern, we think this company can survive any weakness and grow profitably for years to come.

Our portfolio is populated with similarly strong names which we think bodes very well for long-term returns.

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