People Corporation (TSXV:PEO) shares surged 35% in four days after Capital Ideas wrote about the company, following an announcement that PEO agreed to be acquired by Goldman Sachs
Capital Ideas Media | January 27, 2021 | SmallCapPower: As mentioned before, we here at Capital Ideas Media love to write about stocks that continue to outperform year after year yet receive little, or no, media attention.
(Originally published on Capital Ideas Media on December 8, 2020)
That said, we think we’ve uncovered another one this week in People Corporation (TSXV:PEO).
[Editor’s Note: Shares of People Corp jumped 35% in four days after Capital Ideas wrote about the company, following an announcement that PEO agreed to be acquired by Goldman Sachs.]
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People Corp provides individual and employee group benefits, group retirement, and human resource services throughout Canada. The Company has about 14,000 corporate clients in various industries and has approximately $2.4 billion in premiums under management with $13 billion in pension assets under administration.
People Corp considers its business to be recession resistant, estimating the group benefits industry at over $40 billion with benefit costs increasing at more than 5% each year. And, it asserts that the rising cost of healthcare and changing demographics in the workplace has increased demand for consulting advice and solutions.
Since 2009, the company has increased its annual revenue by nearly 1500% along with a 2600% surge in its yearly EBITDA. All of which has propelled its stock price more than 650% higher every year, on average, during the past 10 years.
People Corp has been growing both organically as well as through M&A. Recently, the Company announced its pending acquisition of Alliance pour la santé étudiante au Québec Inc. (ASEQ), a benefits consulting firm focused on the post-secondary student market. ASEQ provides benefits consulting services related to student health and dental benefits for about 650,000 students in post-secondary institutions in six Canadian provinces.
People Corp also recently closed two smaller acquisitions. Desjardins Capital Markets analyst Gary Ho estimates the three acquisitions will cost the Company between C$70 million and $75 million and will contribute more than $8 million in annual EBITDA. Mr. Ho believes these deals “signal its comfort with M&A” even with the COVID-19 impact.
Perhaps more importantly is that People Corporation is growing without excessive shareholder dilution – it has less than 72 million shares outstanding.
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