A Comment -- General Comments From an Expert (A Commentary)
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Premium contentCOMMENT
Top 15 Buzzing Stocks this Week
- Cleveland-Cliffs Inc. (CLF-N)
- AMC Entertainment Holdings Inc. (AMC-N)
- GameStop Corp. (GME-N)
- ContextLogic (WISH-Q)
- Churchill Capital IV (CCIV-N)
- Crocs Inc. (CROX-Q)
- Activision Blizzard (ATVI-Q)
- Freeport McMoran Copper & Gold (FCX-N)
- Simon Property Group Inc. (SPG-N)
- Starbucks (SBUX-Q)
- Fastly Inc. (FSLY-N)
- Power Share QQQQ ETF (QQQ-Q)
- ArcelorMittal (MT-N)
- Nvidia Corp (NVDA-Q)
- SoFi Technologies (SOFI-Q)
COMMENT
Definition of infrastructure. He embraces a broad definition of infrastructure, including electricity generators, renewable power sellers, pipelines. Assets that provide essential daily services to a majority of the population in a supply constrained manner. Hits the classical industrials, energy, utilities, but also data centres, cell towers, renewable energy, air cargo, and transports. These all fit the bill in terms of the business model and cashflow sustainability.
COMMENT
Impact of low interest rates on infrastructure stocks. Wind in their sails for now, and the key phrase is "for now". We won't have low interest rates forever. We saw how when rates spiked earlier this year, valuations compressed across the board. Look at how durable the business is and see how higher rates would impact cashflow and growth. Even if rates do climb higher from here, he feels that there's tremendous value in a number of infrastructure companies today.
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US infrastructure bill. It's difficult to time anything in Washington, and there have been some changes, but the core of the bill is still infrastructure-driven. A lot of money is being allocated to highways, roads, airports, renewables, power generation, and so on. Of all the sectors that will benefit from stimulus, infrastructure is at the forefront, in the US and globally. Time to take a fresh look at infrastructure stocks, as they have multiple years of growth ahead.
COMMENT
COMMENT
Higher input costs curb profit margins? No, because they procure equipment well ahead, even by years, of when the assets go live. They negotiate clauses to insulate them from massive spikes in equipment costs. Plus, they can pass extra costs through. You might run into more trouble if you're an equipment manufacturer.
COMMENT
Risk of US infrastructure bill benefiting only US companies? He doesn't think Biden will go this route, especially with Canadian companies. Canada-US trade deal prevents restrictions like this. If this bill goes through, the US is going to need all the help it can get. US, Canadian, and global engineering firms will benefit.
COMMENT
Impact of Starlink on tower companies and wireless carriers. Starlink is Elon Musk's project to be launched into space to provide internet all over the world. It won't make companies like AMT obsolete. It's designed to provide high-speed internet to replace broadband, not to replace wireless. Great for rural and poorer areas. More that half the world does not have access to high-speed.
COMMENT
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Sector diversity is important. You can get good growth for income focused securities too like with ENB that is up 18% this year. With a longer term time frame, you could focus more on growth. Slow and steady growth is key for a stable portfolio. Unlock Premium - Try 5i Free
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COMMENT
Pullbacks based on technical analysis by Carolyn Baroden Technical analyst Carolyn Baroden months ago called our current volatility. She measures past swings in a stock market and analyses them. One big finding: the S&P pulls back pretty hard, but it lasts only three trading days, like in June, two in May and one in January this year. She thinks the market is in good shape, as long as the SP holds above 4,233.
COMMENT
His reaction to Monday's sharp sell-off was, this has been a long time coming. We haven't had a correction in a long time. Expectations have long been building about the recovery and reopening, but no one can predict how long or smooth that recovery will be. Yesterday saw the start of hesitation on some people's part. Valuations look high, but are distorted by very low interest rates. Don't be surprised. Have cash handy on the sidelines if there's a 10-15% correction, so you can buy those companies for the long term. Meanwhile, he's staying with safe, dividend-paying stocks. Any correction won't last long, he suspects. Energy remains undervalued with some good buys here. Financials are safe. Pipes and utilities too, based on many contracts, though they could suffer a hiccup with interest rates tick up. We're seeing the start of price inflation for consumers in many items.
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Oil stocks and energy sector outlook Energy is still under pressure. Many confuse energy with the ESG movement by blaming the oil companies. In reality, oil is still very much needed. We won't see peak oil demand for another decade as China and India's economies gain speed. Oil prices are never stable, and company earnings will be pressured to be shared as buybacks or dividend hikes. Focus on an oil company with flexible and can buy other companies; he expects more industry consolidation. You need some exposure to energy and don't sell your energy holdings.
COMMENT
Equity sell-off. The pull back is from a variety of factors. There is the start of earnings, Powell last week tried to convince the market of transitory inflation, tapering aid, geo political tensions and lots of bond supply coming to market. There is a perfect storm starting to brew.
Larry Berman CFA, CMT, CTAUnknown
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