Element Fleet Management (EFN.TO)

This has made a lot of money for a lot of investors over the past 20-30 years. Brilliant management. This is also an economic call. You have low interest rates and a good economy, so for a leasing company it is almost perfect. They can finance attractively and are not going to lose a lot of money when leases go bad. They are into almost anything that moves, such as rail cars, transportation companies, etc. Have done lots of leasing and have grown very, very fast through acquisitions, and have mentioned a dividend for next year. As they grow into that 1^st dividend, he thinks a lot more investors will start to pay attention. Growth rate is looking very, very good. Earnings per share this year should grow very nicely. They are economically and interest rate sensitive, but he thinks both of those are positive for them right now. Trading at 17X earnings, which is very, very attractive.

One of the few financials that he likes. Specialty finance. They are an emerging leasing leader in fleet management, rail finance, commercial/vendor finance and aviation finance. There is accelerating earnings growth. Trading at 12X next year’s earnings. He sees substantial upside here.

Primarily a fleet leasing company. He likes it because 75% of their new originations are coming from the US. The railcar side is an interesting aspect. They can basically refurbish them, write off the costs and it is a tax advantage to them. Stock has had a good run. They have indicated that they are going to institute a dividend. A bit ahead of itself here, so he would wait for a pullback.

Announced a new Chairman today. The chairman is now separate from the CEO position. Pretty strong organic growth. Earnings growth in the 30% or better range. 16 times this year’s and 12 times next year’s earnings. They won’t pay cash taxes for a long time. He has had it for a couple of years.

This is a very much a leveraged play on economic activity. If you think there is a slowdown coming out west, because of oil prices, you might want to wait.

A Canadian leasing company including rail, commercial, fleet and aviation. They certainly understand the business. Acquired a company from the US, which is going to give them good US growth. Years ago there were a number of players that had to leave the leasing business, so there is a great opportunity for this company to grow nicely. Trading at about 14-15 times next year’s earnings.

There is speculation that this company might try to buy parts of General Electric’s (GE-N) financing business. People are getting comfortable that they are not going to be paying any tax for about 25 years. Thinks people are going to start talking about one of the large US regional banks acquiring this company, because they have a lot of deposits and are looking for a place to put the money. This would be an attractive long-term thing and be very tax efficient for them. If that were to happen, he thinks you would get a stock price of around $19 a share. They are talking about introducing a dividend next year, which would be a good idea. If it got down to the low $15-high $14 area, he would be interested in purchasing it.

(Top Pick Feb 6/14, Up 26.91%) It is still growing and it is priced into the stock. It lifted because it would be acquired for much more than it is at if it were to be acquired, based on other M&A in the business.

Positioned in the leasing segment of the financial market, an area which has been largely abandoned to some extent by a lot of the larger financial institutions. A well-managed company and is likely to do quite well. However, it is priced very much like a growth stock with a high degree of growth built into the projections. From a price point of view, it is not where he would be comfortable jumping in, but he wouldn’t bet against management.

Fabulous leasing story, right in the sweet spot of the economy. Big in rail and industrial equipment, etc. Their growth rate is going to be better than expected, according to a company announcement. Great management. One day you will get a dividend and pretty good growth in the mean time. Park it for 5 or 6 years.

(Top Pick Feb 10/14, Up 3.85%) Feeling better about it. Most of the revenues are in US$ and costs are in CAD$. They are at a point where earnings are growing and margins getting above zero. He thinks you will see their earnings start to accelerate this year.

Chart shows that this is most definitely a stock in a trading range and has been all 2014. He would like to see it break out. However, it is not a bad thing to own the stock within a sideways trading range, so it is a fairly low risk trade at this point, as long as it does not break support at $12.

Likes this one. It is about 90% US, so they are going to be a beneficiary of the lower Cdn$. Have got a lot of acquisitions where they are finally going to see earnings coming this year. He sees a $17-$18 stock a year from now.

A Canadian based equipment leasing company. They lease into the fleet business of cars and trucks, aviation, rail cars etc. Have been diligently working to build their portfolio and is on the cusp of going through $15 billion towards $20 billion. Earnings year-over-year are going to move from $.35 to about $1. The BV, which is just under $10, is moving up fairly significantly. They are also cutting their costs.

There are some components of the financial sector that makes him nervous. Thinks that the decline in bank stocks is because of crude, because we don’t know how much damage is going to be done in the oil patch. On anything to do with the financial sector, he would be very careful. Chart shows an area of congestion through 2014. Judging by the way the banks are behaving, he would stand aside.