Greg Dean’s Top Picks for July 14, 2025

Greg Dean, Founder & Lead Investor, Langdon Partners

Focus: Global small caps

Top picks: Chapters Group, Sylogist, Yeti

MARKET OUTLOOK:

What a difference a few months can make! We needed an extra month with this quarter’s update to ensure we had the time to properly digest and articulate our views. Conventional wisdom suggested that U.S. President Donald Trump’s administration would extend the era of “U.S. exceptionalism” we’ve seen in financial markets for many years.

We’ve written several times over the past two to three years that we take no position on these kinds of “big picture” or macro agenda items. Instead, we stand firmly behind our promise not to make excuses for our portfolio or its performance.

In fact, our preferred backdrop for generating outsized long-term returns is volatility, uncertainty and pessimism.

So, 2025 kicked off in a way that we believe will be very helpful to our team’s ability to uncover attractive opportunities. We’ve already been busy travelling to track down ideas across the U.S., Japan, Australia, Germany, Austria, and the U.K.

• Market-moving news, fast: Get the BNN Bloomberg App now
• Sign up for the Market Call Top Picks newsletter at bnnbloomberg.ca/subscribe

TOP PICKS:

CHAPTERS Group AG (CHG ETR)

Chapters Group is an acquisitive vertical software company with strong fundamentals and a clear value creation model. Operating in niche, defensible segments across education and IP-rich content, it combines high-margin recurring revenues with disciplined mergers and acquisition (M&A) execution. Its buy-and-build strategy is underpinned by a proven ability to integrate and scale founder-led businesses while maintaining high returns on invested capital. Despite operating in structurally growing markets, it trades at a discounted earnings before interest, taxes, depreciation, and amortization (EBITDA) multiple relative to peers—implying minimal value is assigned to its acquisition pipeline or embedded operating leverage. Free cash flow (FCF) conversion is strong, leverage is conservative, and management is both aligned and repeatable in its playbook. The market is overlooking the quality of its earnings and the long runway for consolidation across fragmented European verticals. In our view, it’s a classic compounder hiding in plain sight—one that fits our preference for high-quality, cash-generative platforms bought at a meaningful discount to intrinsic value.

Sylogist (SYZ TSE)

Sylogist sells enterprise software for school boards, municipal and state governments, and non-profits. It recently completed a big investment in its product. Reaching an inflection point in scale with software as a service (SaaS) revenue growth ramping toward 20 per cent growth this year and closer to 30 per cent the next. As SaaS is more profitable, the business is becoming more profitable over time as well and we expect FCF to grow around 40 per cent per year for the next three years.

Comparing to our global software universe, it trades at just over four times SaaS revenues vs. peers closer to eight to 10 times. There is very little debt on the business and given the low entry multiple, we believe there is limited downside and material upside (double over our three-year time horizon (25 per cent internal rate of return (IRR))

YETI (YETI NYSE)

Yeti is a world class outdoor consumer brand that has built a very loyal following due to its product durability, utility, and community-based marketing. It’s brand, marketing and product development prowess will allow it to continue launching new products and continue expanding globally. Through 2024, Yeti has grown its revenue and adjusted earnings per share (EPS) at 15 per cent and 20 per cent, respectively. We think with continued product development and the entry into the bags category, Yeti can continue growing its business in the high single digits with continued margin expansion. Further, this can be achieved all organically and with very little capital required, which demonstrates the quality of the business.

At 12 times 2026 earnings, Yeti trades as if it is an ex-growth consumer company, while we believe it has a very long runway for continued growth. We think the stock is worth about US$60 three years from now at a 15 times price-to-earnings ratio (P/E multiple). As such, we think there is an extremely favourable risk/reward.

PAST PICKS FEB 13, 2025:

A&W (AW TSX)

Then: $34.92

Now: $37.24

Return: 7%

Total Return:11%

BayCurrent (6532 TYO)

Then: ¥7031.00

Now: ¥8134.00

Return: 16%

Total Return: 16%

SmartCraft ASA (SMCRT OL)

Then: NOK26.20

Now: NOK28.90

Return: 10%

Total Return: 10%

Total Return Average: 12%