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Rona Inc (RON.TO)

DON'T BUY
Has been reacting pretty much along with the outlook for the housing market. Hit its peak around 4 X book value and has been trading in a mushy way ever since. Too late in the cycle.
WATCH
Looking at a long-term chart, the next stop on its decrease is $15. The fear is that the Wal-Mart's and other big chains will come in and create havoc with their business. Once it breaks $20 and shows signs of stabilising, he will buy.
DON'T BUY
Investors worry about rising short-term interest rates which can hurt housing related stocks. There is also all the concern of Lowes coming into Canada as competition. Long-term, it's a good name to be in. Right now the trend is down so there's no reason to be there.
BUY
The whole home improvement sector has been under pressure because of worries that the housing boom is going to implode. Resale homes are at record levels so doesn't think the renovation trend has come to an end. The stock has probably been oversold.
BUY
Valuation is quite reasonable at this level. Stock price has dropped because of fears of a housing bubble and if there might be a slowdown in home improvement levels.
BUY
One of his favourites and with the pullback the P/E ratio is 12.2. That compares to 15+ for Canadian Tire. Could be an interesting buy here, especially if new housing slows down and people become more interested in renovations.
HOLD
A great company. Developing its chain into Quebec and across the country.
BUY
Has a model price of $33.59. A 54% differential.
DON'T BUY
In the short term there's been a couple of warnings from the US home builders taliking about weakness. If the concern about short term interest rates starts to catch, and consumers start to pull back, this is an economically sensitive stock.
BUY
Renovation sector looks very strong. A great company.
BUY
Has a huge business in small stores around the country so competition from big box stores is not much of a problem. Very service oriented.
HOLD
Stock has lagged probably due to worries on the housing and renovation markets. Feels this is more of a problem in the US where the real estate market is way more extended than it is in Canada. Company has been well run.
WEAK BUY
Has done extremely well. Consolidated a lot of the home business. Home Depot (HD-N) is their competition, but are limited ti big box stores where Rona uses both small and big facilities so has more opportunities as to store location. Same store sales are starting to decline.
HOLD
In a defensive sector (consumer discretionary) where managers might want to rotate into. Had a run up and is now in a consolidation phase. If you own, don't let it make a 52 week low.
BUY
Has executed extremely well. Thinks people may be worried about competition from Home Depot (HD-N) and Lowes Companies (LOW-N). So far they are holding their own and doing extremely well. You'll have to watch out for the long term risk.
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