Whistler Blackcomb: Winter and Summer

05/25/2016 7:00 am EST

Focus: STOCKS

Deon Vernooy

Chief Investment Strategist, Canadian Edge

This ongoing recommendation -- the largest and most visited mountain resort in North America — had a whopping total return of 46% since we recommended in May 2015, recalls Deon Vernooy, editor of Canadian Edge.

We originally recommended Whistler Blackcomb Holdings (WB) -- the ski resort owner -- for its good dividend track record, strong balance sheet, solid cash flow, attractive yield and reasonable growth prospects.

We also enjoyed some good luck: the ski resort benefitted from an exceptional snow season – a factor that we could hope for, but not predict.

The stock has shown especially impressive gains over the past year, particularly given the dismal climate for the overall Canadian equity market during that time.

Meanwhile, the company plans to spend more than $345 million over the next five years to develop various facilities in an effort to attract more summer and shoulder season visitors.

We’re pleased that Whistler plans to expand its facilities to add a water park and other attractions, improving the resort’s year-round appeal.

The developments will be done in three phases: the first includes an indoor water park, mountain bike park and suspension bridge, cliff jumping and rock climbing. The total cost is around $100 million.

Phases two and three will include the redevelopment of the Blackcomb base, high end town homes and a six-star boutique hotel, for a total cost of around $250 million – with about $165 million earmarked for the real estate developments.

The proposals are subject to various stakeholder approvals, including municipal and provincial governments and First Nations group consultations.

No target date has been set for a conclusion, but it’s realistic to expect phase one in operation by 2019.

The dividend yield is 3.6%, with little growth expected until management has finalized plans for the timing of the major expansion plans.

Until more details become available on the expansion plans, the share price may be capped by the current valuation. However, this is a prime asset, and we plan to hold on for the long term.

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By Deon Vernooy, Editor of Canadian Edge

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