Keeping the Line Moving
Canada's ATS Automation Tooling has weathered the worst and is geared to the global recovery, write Benj Gallander and Ben Stadelmann in Contra the Heard.
If ever there were a bellwether stock in the Contra portfolio—a harbinger of change in the economy as a whole and the equity markets in particular—ATS Automation Tooling (TSX: ATA) would be it. Which is not to forget that, by the time a recovery or decline has been officially designated as such and communicated to us citizens by the consortium of economic shamans, the price already [will have] moved smartly. Unfortunately, nobody rings a bell or turns over the cards to let you know when it's going to happen.
Judging purely by the market's anemic response to ATS's decent financial reports, we should not look forward to an immediate global economic recovery, because if good times were at hand, we would be seeing a much more vigorous reaction.
Perhaps there remains the stigma of being associated with the automotive industry. There does appear to be some correlation between ATS’s share price and news items regarding any of the North American automakers. But the company does supply manufacturing equipment to other industries. [During the most recent quarter, sales to the auto industry accounted for less than 12% of revenue—Editor.]
In any event, it's been a pleasure lately to go over the company's financial results. Consolidated revenue for the 12 months ended March 31st increased by 29% to C$855 million, including improved fourth-quarter revenues of C$201.8 million.