Earning Reports to Watch (Feb 04-08)
Consumer stocks such as Canada Goose, and Saputo, as well as many industrial and financial companies are reporting their earnings this week. Notable among them is the Brookfield names, BPY.UN-T and BEP.UN-T.
Here are the companies with earning reports to watch.
Andrew Peller (ADW.A-T) Feb 04
(A Top Pick Apr 28/21, Down 32%) Beverages had a good run during Covid as consumers stocked up. Peller saw good growth, even though some areas of Canada were shut down. But import costs have risen, so margins have declined in the last few quarters. The good news is that travel and restaurants are reopening--and…
Has had a huge run and is not sure he would be courageous enough to get onboard at this point. Management has done a remarkable job of building this. He would look for a little lower entry point.
A solid company with a good balance sheet and nice yield. There is a modest opportunity for upside. Since 2012 they have traded between 2.5 and 3.5 times book, with a downward basis trend. The share price is unchanged in ten years and has added no value to investors in that time. He calls these…
He doesn’t know the seasonality on this, but the technicals show that it has been in an upward trend for quite a period of time. During the last little while, it has been in a trading range between around $19 and $22. It is not unusual for a lot of stocks in the consumer staples…
Safer than a non-royalty stock? They pay out everything they earn at a 13.5% dividend yield. It's sold off sharply, because it is perceived that fast food chains will close down during this outbreak.
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Overall likes the stock. The Japan deal to expand their relationship with Sazaby is positive. The joint venture should generate total revenues of 60-65M CAD in Fiscal 2023. Good prospects in a recovery world. China’s growth could be a headwind, since it is still closely…
Saputo Inc. (SAP-T) Feb 07
Global business. A laggard, but that's the opportunity. Earnings disappointment due to input costs. Fantastic acquirer and integrator. A very comfortable holding.
Pleasantly surprised with the business fundamentals. Aspects of their business are growing. Very undemanding valuation. Continue to hold. It's on his watch list.
Yellow Media Inc (Y-T) Feb 07
(A Top Pick Nov 22/18, Up 12%)Convertible 8% 2022 bonds He owned the Yellow senior bonds, but then moved into these convertibles. Most of their revenues are in digital, but that has struggled. New management has cut costs a lot until free cash flow now stands around $100 million this year. Their EBITDA margins are…
(A Top Pick Jul 27/17, Down 6%) Volatile. It's come down a lot, but there's a lot of upside ahead. Well-managed. They can make accretive acqusitions. Their problems integrating some businesses are behind them and they now have a strong runway ahead.
Finning Int (FTT-T) Feb 05
Reopening and global growth play. Significant earnings runway. Peak margins are a ways out. Trades at 12x, 13% EPS growth rate, so PEG really works. Cheaper than CAT. Good at this part of the cycle. Yield is 2.74%. (Analysts’ price target is $42.89)
Westjet Airlines (WJA-T) Feb 05
It’s under review by the government whether the takeover will take place. You’re dealing with regulatory uncertainty right now. If you bought it before the takeover, unless you’re in tune with what will happen, he wouldn’t own the stock any longer. The price is fair.
ATS Automation (ATA-T) Feb 06
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. It is sensitive to broad economic growth and is likely why the shares are dragging down. Trading at 16x forward earnings and good growth is expected. Risks are most likely already priced in. Cost pressures and slowdowns are possible, but many companies, including ATA will…
Bruce Flatt is one of the greatest asset allocators. Buying world class assets around the world including commodity related ones. 70% of its free cash flow is indexed to inflation. Buy 10, Hold 2, Sell 1. The following applies to all three top picks. They know when to buy and when to sell. They think…
Toromont Industries (TIH-T) Feb 06
Very difficult to get construction equipment given supply chain disruptions - creating opportunity for business. Back -log at record high with improving margins and strong earnings/revenue. Pristine balance sheet with no debt and net cash. Likely will see company increase M&A activity. Strong management team with good track record of capital allocation.
Impressed with how the business has grown and the direction it's heading. Attractive multiple, just under NAV. In a position to really grow NAV over the next several years. Focusing on growing investments in healthcare and tech. Lots of capital to deploy. Yield is 0.50%. (Analysts’ price target is $73.61)
Heroux-Devtek Inc. (HRX-T) Feb 08
Has done a fantastic job. In the top 5 of navigating the pandemic. Landing gear and aerospace business. Commercial business is slowly ramping up now. Should see a string of earnings beat in the next few quarters. The margin expansion will be good. An area of the market he wants to be in. Management can…
First Cobalt (FCC-X) Feb 04
Cobalt is attractive but this is not a cheap producer, because they're in Canada and not Russia or Congo.
Domtar Corp. (UFS-T) Feb 05
This has been quite erratic and trading in quite a wide range. He’s been seeing contraction in breadth in forest companies, so is a little cautious on this area. If he had to focus in one space, it would be on lumber which looks attractive. You can use a basket of them through the ETF…
Canfor Corp (CFP-T) Feb 06
(A Top Pick Jul 02/21, Down 3%) A play over the next year. If you look at housing demand in US and Canada over the next 5 years, there will be increasing demand for lumber. Trading at only 2x this year's earnings. Earnings for 2022 will be solid.
Canfor Pulp Products (CFX-T) Feb 06
Seasonally, forest product stocks have a history of reaching a peak around the 3rd week in April. This year is no different. Probably an opportunity to take some money off table.
Nutrien Ltd. (NTR-T) Feb 06
This is the combination of the previous Potash and Agrium companies. It is one of the best performing stocks on the TSX. He is dubious on commodity names since you can't bet what the commodity prices will do. For this one you should have bought a year or to ago.
Interfor Corp (IFP-T) Feb 07
With lumber companies and other commodity related companies it is better to trade them rather than hold for the long term. He sold last year in the 30 dollar plus range after buying at $6.50 a couple of years ago. Lumbar prices have peaked with house prices so be cautious.
Russel Metals (RUS-T) Feb 07
Steel services, an intermediary. Not a dividend growth stock, and that's part of his firm's mandate. High yield, but the dividend has been stuck at its current level since about 2014. At the top of its trading range. In a slowdown, steel isn't what you want to own. Yield around 4.5%.
Goldmoney Inc (XAU-T) Feb 04
He rarely talks about Gold. He thinks it is a strong sector bet. It is been out of favor for so long that mines have closed, productions have closed, mergers and acquisitions happened. Central Banks are now massive buyers of Gold. they want to get out of the US dollar. The Fed is not raising…
BSM Technologies (GPS-T) Feb 05
Uses their GPS system to figure out where trains are, and to more accurately schedule trains and service vehicles for people working on the rails. Reported on Aug 14 and earnings were down 10%. That was against a 32% increase in sales. In the coming quarter, earnings are expected to be down 75% year-over-year. Great…
Vecima Networks Inc. (VCM-T) Feb 07
It is a well run company. He got out of it. They paid out a lot of special dividends and the stock did well, but he got out because most of the catalysts are out of it.
SQI Diagnostics Inc. (SQD-X) Feb 04
They make life easier for large diagnostic test companies. It automates the testing process. They did a final financing. They've been working on this technology for 5 years.
United Corps. (UNC-T) Feb 04
Share price on the path to recovery. Scores well on valuation, but held back by price momentum. Trades cheaply. Solid yield. Beat most recent quarter. Housing markets have been incredibly resilient. Could see himself as a buyer as they rotate into financials.
Intact Financial (IFC-T) Feb 05
It has performed very well in Canada. Continues to make acquisitions in North America and elsewhere. It is a good (necessary) business since people need to spend money on insurance. He would keep if owned but prefers one in the same field which will be one of his top picks.
Owned it a few years ago and cut his losses. Now, cut your losses. This business is struggling as an asset manager, specifically to retain and attract new clients. Also, their key managers, including the CEO, have been leaving. They won't generate much in performance fees, which has been an attraction for investors in the…
Allan Tong’s Discover Picks BPY.UN is anchored by diverse holdings across sectors, including industrial, retail and commercial properties, and across countries. Of course, we all know what happened next to the world, which wiped out the retail and office property markets. BYP.UN shares have slid around 7.5% since that call, but the 7% dividend has…
Great West Lifeco (GWO-T) Feb 07
A pocket of value in the sector, life insurance is the cheapest in the group. Lifecos definitely have room for multiple expansion and earnings growth. His preferred name, with a more mature M&A market focus, whereas an MFC is more focused on EM.
CI Financial Corp (CIX-T) Feb 08
A lot of corporate activity is changing the company. Stock price is trading fairly cheap. Better names to invest in. Strong dividend with good management. Would prefer Canadian banks, energy and sold off tech stocks.
IGM Financial Inc. (IGM-T) Feb 08
(A Top Pick Nov 25/21, Down 9.6%)Stockchase Research Editor: Michael O’Reilly Our PAST TOP PICK with IGM has triggered its stop at $45. To remain disciplined, we recommend covering the position at this time. This results in a net investment loss of 4%, when combined with our other previous buy recommendation.
Suncor Energy Inc (SU-T) Feb 05
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The activist investor could be positive overall. The long term impact will depend if things change. However, the stock has lagged the sector, and management could use a refresh. Cost savings could be implemented and growth could improve. Unlock Premium - Try 5i Free
Generally not a fan of the Chinese inter-listed companies. He has a Short position in this one. There are better places to be.
Mullen Group Ltd (MTL-T) Feb 06
He models $16.57, so 28% upside. But are you bullish or bearish about this year? He's bearish, expects a recession in Q3, when this falls back to $4-5. Buy a half position, especially at lower prices.
A conglomerate and he isn’t a big fan of this model. A well-known catalyst investor has just purchased about 19%. May sell of some weaker units.
MEG Energy Corp (MEG-T) Feb 07
Focused on making its environmental footprint as positive as it can be, and the team has done a good job. Paying down debt, and once it does that you'll see moderate growth and shareholder returns.
Arc Resources Ltd (ARX-T) Feb 08
(A Top Pick Apr 19/21, Up 118%) The 7 Generations buy was great. Natural gas prices boosted shares after lagging last year. He lightened his holding as nat gas spiked, and is migrating more to crude oil. Not sure if the nat gas boom can sustain.
Cameco Corporation (CCO-T) Feb 08
uranium stocks outlook Nuclear power is one of the few ways of solving the need for non-fossil fuel energy, but these plants need 10-15 years to build. Plants in China and the Middle East are in progress. Buy this below $30 and hold 10 years. It moves over a long period of time. He targets…
Just Energy Group (JE-T) Feb 06
They sell energy contracts. They have under gone several management changes over the years. He is not a great fan of this business model.
Renewables haven't done much. Lagging, rather than not responding altogether. If oil spikes further, anything not carbon-related looks affordable. Whole sector is undervalued, will move, and the stocks typically pay a decent dividend.
Valener Inc. (VNR-T) Feb 08
A lot of success is tied to Gaz Metro in Québec, but they also have some wind farms that have recently come online in the last year or 2, and giving good returns to the company. Recent earnings were solid and they raised the dividend by 3.7%, and plan to raise it 4% next year.…
BCE Inc. (BCE-T) Feb 07
He is bullish on Telcos which do well in this environment. Some clients own BCE in their portfolios. Valuations are high and the dividend is not necessarily fully covered today but hopefully in a year. He prefers Telus which is better run with interesting assets and certainty of dividend growth.
Use this list wisely to identify buying opportunities.
Happy trading !!!