CGI Group

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Hello,

I was wondering about your thought on this Canadian software company at this time.

Thanks!

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Asked on December 5, 2022 9:41 pm
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Hey JJ,

CGI is an underrated tech stock. It has a goal of doubling in size in 5 to 7 years (from 2021 levels) and is well diversified across not only various geographies but also verticals as well. It has a very strong management team and has performed quite well over the years. It is on track to deploy $1B in acquisitions of which it has spent upwards of $650M through the end of Fiscal 2022. It is one of the better capital allocators in the space.

This past year, it saw organic growth reach 15-yr highs as it came in at 8.5% on a constant currency basis - analysts were expecting int he mid-single-digit range. It also wasn't just one area, it was a broad and across most of its segments. The company exited the year with $24B in backlog against $12.9B in revenue and as such, is well on its way to achieving growth targets.

This is a company that typically flies under the radar. It is now trading at around 10.9x forward EV/EBITDA which is below its historical average of 11.7. All in all, it is an excellent company and I'd have no problems taking a position today.

Of note, I am long CGI Inc. and have been for many years.

Mat

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Posted by Mathieu Litalien
Answered on December 7, 2022 1:31 pm