The markets have been doing well, and investors are keeping a close eye on this week’s earning reports from a great number of Canadian large-cap stocks. Cannabis giants Aurora Cannabis (ACB-T), and Canopy (WEED-T) are both reporting their earnings this week. Other big names this week include Canadian Tire (CTC.A-T) , Shopify (SHOP-T) and, Telus (T-T) as well as Bombardier (BBD.B-T).
Here are the companies on Stockchase that are reporting earnings this week:
Aurora Cannabis (ACB-T) Feb 11
Don't buy cannabis stocks here. Their earnings just aren't there. You can buy good value companies at discounts to book value so why go for this one. Move on. It is an opportunity to upgrade your portfolio.
A US company that's consolidating in the medical market (home lifts, ventilators, oxygen, etc.). He continues to like it. It was a past pick and since they made an acquisition. The stock has increased, though not as much as he expected. He predicts the valuation will be pretty attractive. This could be a takeover target…
SQI Diagnostics Inc. (SQD-X) Feb 11
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.
Inmed Pharmaceuticals (IN-T) Feb 12
This is another company in the cannabis space. This is not a cannabis producer, it is a company that adds value in that space. They are mapping cannabinoids, looking for different formulations to treat different diseases.It is highly speculative, but he thinks there is opportunity for this type of company. He likes the management. In…
Doesn't know this well. They're in the cannabis sector, more in the extraction market, an area that will continue to expand. He's watching their progress in earnings.
Canopy Growth Corp. (WEED-T) Feb 14
(A Top Pick Dec 09/19, Up 30%) Still likes this long-term, but he's now focused on U.S. weed names. He prefers other names.
A bet on Canadian Tire over the next 10 years. Doesn't see significant amount of growth. Like a bond proxy. Safe play, but there are better opportunities.
United Corps. (UNC-T) Feb 11
Clarke Inc. (CKI-T) Feb 12
(A Top Pick April 25/16. Up 16.15%.) A small investment management firm. Historically they have done very well in investing in both public and private oil companies, and buying and selling assets. They delivered a special $2 dividend to shareholders in June. He is a little less bullish on this now. Trading at a slight…
Killam vs. Crombie REITs Killam holds apartments, an asset class he really likes among REITs. Rent-collection rates are really high for Killam, so no worries about that. All these REITs trade at a 10-15% discount to NAV. Funding costs will drop 1%, because they get funding from CMHC. A hiccup comes from mobile homes which…
(A Top Pick June 1/17, Up 12%) A great manager. Out of Alberta with very good western properties. He sold during its recent highs, but still likes it.
A hold. A value name in apartments in Canada and the U.S. He's impressed with how stable their Toronto portfolio is, holding occupancy quite well. MGR is in the US sunbelt and Chicago. MRG is higher-leveraged. He's seeking REITs that are defensive. He doesn't see as much growth here vs. the REITs he already owns.…
They over-distributed, so he avoided it. Then, the pandemic hit them hard, because they own some retail. Also, there are CEO succession worries. He avoids office and retail and likes industrials and multi-residential in real estate. This REIT is cheap, though, on valuation. It's hard to determine which sectors will survive in real estate.
Stockchase Research Editor: Michael O'Reilly AP.UN is a REIT that manages office space primarily in Toronto and Montreal. As vaccines are rolling out, we expect the worst is now over for this space, signaling a time to re-enter. It trades at less than 7x earnings and pays a good dividend backed by a 29% payout…
Atrium Mortgages (AI-T) Feb 13
80% of its assets are retail. He shies away from retail, but Loblaw owns half of those assets, which is stable and boasts high rent collection. The company is in good hands and the dividend is safe. Managers are doing a good job to diversify into apartments and industrial spaces to diversify away from retail.
(A Top Pick Dec 27/19, Up 7%) For a real estate company, it has survived well, due to its industrial real estate holdings. He likes it, but doesn't own it now; the space became too uncertain. He bought it for its yield until the pandemic made real estate too uncertain.
First Capital Realty (FCR-T) Feb 13
Used to own this. Pre-Covid they were a good asset creator through buying and integrating those assets. Problem is they also own retail, which could be a problem for a while. This exposure is a concern. Overall, though he likes the managers and the company.
Manulife Financial (MFC-T) Feb 13
MFC vs. GWO Likes Great West in his portfolio because of its strong yield of about 4.76%. MFC dividend is 4.63%. Both have performed well since March 2020. Quite similar. MFC provides more foreign exposure, especially Asia. Insurers are doing well now, and benefit from steepening yield curves.
It's a holding company that holds various investments. Be long-term here and patient. Some of those investments need time to recover, like secondary malls and office towers, mostly in Alberta. Those are headwinds. It'll pay off, but not until the long term. Things will recover. Caveat: This is thinly traded with low volume.
Smart REIT (SRU.UN-T) Feb 13
Focus on Walmart and adjacent retail. Likes Walmart, but the adjacent retail faces headwinds. Management team says better growth in residential than in retail. She'd take this cue and invest in companies that already have residential exposure. Talk of distribution cut.
Financials as a group will have a tailwind. Good global footprint. Worthwhile place to look. He'd be a buyer. Manulife is also attractive.
TMX Group (X-T) Feb 13
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Has a more or less monopoly position within the industry in Canada. Offers a good combination of capital appreciation and dividend growth. Unlock Premium - Try 5i Free
He expects BAM to take it over and it's a good thing to keep BPY within Brookfield/BAM. The deal is accretive for BAM which he really likes. About BPY, you don't want to own these assets (offices, large retail) during this pandemic. Better to own apartments and industrials. BAM fell 5% on news of the…
Fairfax Financial (FFH-T) Feb 14
He really has to like it. It got pummelled in the COVID melt-down and since then it has been working in a rough sideways direction, but it is way below its normal valuations standards while the earnings forecasts have bounced back powerfully. It will also help if interest rates go up. He thinks this stock…
Populated by public and private investments in India. One stock he would tuck away for 10 years. India is the largest democracy, and corporate tax cuts have been encouraging. Fundamentals are looking great for India.
He doesn't own REITs now, especially in offices and retail. How long will it take for their occupancy to return? In REITs, you pay around 90% earnings so there's little wiggle room for error. He'd rather buy retirement homes like Chartwell and Sienna, which offer better growth.
Rifco Inc. (RFC-X) Feb 14
Most recent quarter was a great one. ROE was 28%. With all the stuff that is happening in the marketplace right now, there are a lot of concerns about Alberta specifically, and you also have a lot of concerns about financials. Thinks they put in a great quarter. To be a buyer of the stock,…
Very strong brand. Sales growing quickly, 33% compound rate over last 3 years, by expanding geographically and improving e-commerce channel. Margins have been improving. Lots of room to grow over a multi-year timeframe. No dividend. (Analysts’ price target is $35.31)
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…
(A Top Pick Jan 09/20, Down 1%) Wouldn't buy again. Remains a good company, but Tim's is exposed to the breakfast trade, which has fallen off. Popeye's and Burger King have done well. There are better ideas out there.
Yellow Pages Ltd (Y-T) Feb 11
Stands out as one of the best run of the Canadian quick serves. Great growth strategy. Execute well. Hit by pandemic, but the dividend will come back. Short-term blip in a great long-term story. Hold it if you own it. Has potential to continue to surprise.
It has benefited as their stores were deemed essential services. Traffic has increased in the past year. It is trading at a reasonable multiple, but she feels they are limited in geographical scope.
It's one of the best survivors in retail. They held their own against Walmart. Great job diversifying into Sportscheck and Marks Work Warehouse. They have the goods that people want, so have benefitted from the pandemic. But the stock has recovered a lot. Trades at a 10x earning basis, so cheap. That said, there are…
D-Box Technologies (DBO-T) Feb 14
Cinema closings? COVID-19 has put this investment thesis on hold. It does not kill it, but there are other opportunities out there. Their theater technology is a wonder, but it would not interest him now. You need to know when movie theaters will be allowed to open up again.
Doesn't know this company. Loves the space. Names with a good name, like "green" move well. They produce organic foods, and people are looking to eat healthier. Fancy name. Fancy products.
Input Capital Corp (INP-X) Feb 14
They do canola mainly. At these prices the stock is so cheap. He sold because he was not seeing enough capital being deployed in Canola streams.
🛢 Basic Materials
Canfor Corp (CFP-T) Feb 11
(A Top Pick Dec 26/20, Up 81%) He sold mid-last year, too soon. Housing proved to be very strong. He would buy it again if lumber prices pulled back again.
Canfor Pulp Products (CFX-T) Feb 11
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.
First Cobalt (FCC-X) Feb 11
Cobalt is attractive but this is not a cheap producer, because they're in Canada and not Russia or Congo.
Orvana Minerals (ORV-T) Feb 11
He owns it around these levels. They have mines in Bolivia and Spain and looking to acquire in Argentina. The property they just bought has costs of $500-$650 per ounce of gold. He is concerned about the revolving door on management. He does not know where gold prices are going to go. He will continue…
Belo Sun Mining (BSX-T) Feb 12
They have a large Brazilian gold deposit. The problem here are indigenous people challenges there and a government contract that pays out a crazy amount to the managers. This payout is not aligned to the shareholders' interests. Then again, it's a cheap stock vs. gold in the ground.
Lion One Metals Ltd. (LIO-X) Feb 12
Fiji is an interesting place. They have raised $85 Million last year when it was tough. If they get this thing going it will build up confidence. They are putting a relatively small scale gold mine into production while doing exploration. They should eventually get bought out.
There is no dividend. Sales are up but earnings are less negative rather than positive. Earnings growth forecast for this year is zero.
Taseko Mines Ltd. (TKO-T) Feb 12
This is on his watch list. He is not familiar with their fundamentals. Today's earnings release will help define their future.
West Fraser Timber (WFT-T) Feb 12
It is almost at the '08/'09 level. It has collapsed below 2.5 times book. If you are patient, we are getting to an area of lows. The twelve month earnings forecast is minus 14 cents. He figures $22 for a bottom in the share price.
He considers it a buy still today. It has not recovered as much as the other three. It is because it is a specialty lumber products company. The price of lumber has been on a tear this year. The strike is no longer in place but it is trading lower than it was then. There…
Acadian Timber Corp (ADN-T) Feb 12
Lumber company with a good dividend and low payout ratio of 70%. The dividend looks safe. He does not expect a lot of capital returns. There are some cyclical risks with housing markets. There are 45% owned by Brookfield. A good income holding. Yield 6%
Barrick Gold (ABX-T) Feb 13
(A Top Pick Jan 07/20, Up 27%) He would buy it again. It is quite cheap relative to its own long term range. He thinks it will go right back up to its former high.
135% payout ratio, not sustainable. But if business returns, as he thinks it will, payout ratio will go down to 62%. Real problem is balance sheet. Need to focus on asset sales. Has upside, but pretty risky. Better yield stories elsewhere.
Kinross Gold (K-T) Feb 13
Barrick Gold? He prefers Kirkland Lake and Agnico Eagle among the big producers, because they have better leverage and are streamlined. He always puts Barrick and Kinross in the same category. Kinross buys assets at low prices, but he'd rather buy the companies they buy than Kinross itself. (The one positive with Barrick is Warren…
A smart group of guys. They are putting a fair bit of work into proving their concept is right. They seem to be backing up their thesis. It is looking like it is working so far.
This is a zero, although not priced there yet. That is where it is going. It has been a lousy company for a long time. Madagascar will prove to be their undoing. They defaulted on their debt in February. Their debt is currently worth 54 cents on the dollar so the stock is worth zero.
There were a couple of subtle things went on with the trust conversion which discouraged a lot of investors. An illiquid stock. Most of their exposure is in B.C. and Alberta where housing is still very strong. Thinks we're at the peak of a cycle so don't have it as a long term hold.
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. A base metals play fueled by infrastructure spending expectations. Government spending will help and the sector should also simply do well as the world economy resumes its growth. Unlock Premium - Try 5i Free
They hold Quebec assets. They just reported a quarter that blew away expectations. The iron ore price has bounced back, and CIA produces high-grade iron ore, so they fetch a premium price. Also, transporatation costs have declined in the last month. If China comes back into the fray, CIA will enjoy huge growth. (Analysts’ price…
Outlook for copper is wonderful, as it's the metal of electronics. Zambian government is demanding more in taxes. Bought Panama mine at a high price. Political considerations are holding it back.
Goldcorp Inc (G-T) Feb 14
Lundin Mining Corp. (LUN-T) Feb 14
The price of copper is rising and could break new highs in a new bull run. LUN says they will raise their dividend which is currently small. Free cash flow grew a lot to $165 million and expected to grow 68% in 2021, though sales dropped 13%. Shares are breaking out of a 10-year trading…
New Gold Inc. (NGD-T) Feb 14
Doesn't think there will be a take-over soon. The CEO used to be the CEO of Richmond Mines. They now have an operator. On their watch list and he has confidence in management.
(A Top Pick Mar 15/19, Up 17%) It was bought back in October and so he does not hold this any longer.
Usually silver will lead gold by a little bit. Everything in silver right now is looking really, really good. Chart shows a downward pattern, but has reached the upper side of the channel and should be breaking out anytime now, and do quite well through to mid-March and maybe April, depending on the whole complex.…
Winpak Ltd. (WPK-T) Feb 14
Their customer base is the food industry and it does not grow that much. This company can only grow when they make acquisitions. There is nothing wrong with it but there is not enough upside to buy. It is a good company.
Yamana Gold Inc. (YRI-T) Feb 14
It has been a relief overall. It is similar to Gold Bullion. He would hold off on it right now. Gold stocks have gotten ahead of the bullion.
Goldmoney Inc (XAU-T) Feb 11
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…
Likes it. It's cheap vs. its peers. They did financing and have a lot of cash. Expect acquisitions. Own this for 4-5 years. Buy for now, but hold for that long. It will bounce around with the tech sector. They've done the right things this year to shore up their balance sheet.
Shopify Inc. (SHOP-T) Feb 12
Valuations matter to him and this trading at 25x revenue. Yes, their model is working and maybe every small retailer in the world will use their platform. It's a great company, but not sure if it's a great stock. Remember the 1999-2000 tech bubble when stocks were too far of their valuations.
They recently had a joint venture with Baker-Hughes (BHGE-N), where Baker Hughes is co-marketing one of their products. It would make sense for Baker Hughes to take over this company. Schlumberger (SLB-N) is the only company with a competing product. (Analysts’ price target is $9.50.)
A tech pick? CSU are great acquirers and integrators. Why buy a US tech stock when you can buy a Canadian one at half the price (in terms of valuation)? Software will take over the world.
Great company. Growing organically. Adding new clients. Providing e-commerce solutions to selling products online. Trades at a big discount. Recently raised capital. No dividend. (Analysts’ price target is $12.00)
Sierra Wireless (SW-T) Feb 13
He follows this, but does not own it. They just reported an earnings miss. He does not see their business model panning out on the financial statements. Now trading under $12, he expects more downward pressure.
Tucows Inc. (TC-T) Feb 13
(A Top Pick Jul 29/20, Up 17%) #2 in the domain business. A cash cow. Steady and predictable. Also have a mobile business and a fibre business. In this environment, expects them to have many more installations and business should boom. Top management. Would buy at these levels.
Generally not a fan of the Chinese inter-listed companies. He has a Short position in this one. There are better places to be.
PrairieSky Royalty (PSK-T) Feb 11
Likes royalty because there is less business risk. However, it is not risk free. Probably a good buy on dips. The reflation trade is interesting. For the next 6-12 months, it is okay for a trade.
If we have a warm winter, it debases the bullish theme. We are seeing a warmer winter and gas has fallen from its peak. There are some companies in the gas space that would be buys, but this is a hard buy in the current moment, especially with the struggle for investor relevance. He would…
Cenovus Energy (CVE-T) Feb 13
HSE-T + CVE-T: Stay after the merger? He does not own either one. He understands the merger makes sense. There are a lot of cost savings that can be found. He prefers CNQ-T, PXT-T and one of his Top Picks today. He prefers these to HSE-T. If the sector bounces back you could get an…
Tag Oil Ltd. (TAO-T) Feb 13
(A Top Pick April 23/13. Long Tag Oil (TAO-T) and Short Imperial Oil (IMO-T). Down 42.51%.) Did an equity issue last fall at about $4.40, which the Street didn’t like. This is a New Zealand oil/gas play and they have about 5 or 6 catalysts coming up in terms of major wells.
Encana Corp (ECA-T) Feb 14
Just beat earnings and have increased production. Cheap valuation compared to peers. But it's getting more expensive heading into 2021. There's no growth here, but that goes with the entire oil patch. The real issue is will they survive. Their balance sheet is getting better, but still high for a blue-chip name. You'll be saved…
Inter Pipeline (IPL-T) Feb 14
They have been hit hard. In 2008 these were the best performing sector. This year they have performed terribly. They are attractive given the dividend yields. He still owns some IPL-T. They cut their dividend and are working on a feed plant for recycled plastics. In the summer there was considerable insider buying. If you…
Precision Drilling (PD-T) Feb 14
The biggest land driller in Canada and one of the largest in North America. They still generated free cashflow even during challenging times. At $50 oil, they can generate free cashflow equivalent to their market cap if producers drill to maintain production. Downside is limited since they generated free cash this year still. (Analysts’ price…
Superior Plus Corp (SPB-T) Feb 14
(A Top Pick Dec 13/19, Up 10%) It hasn't stumbled during this pandemic. Incredibly consistent business, distributing propane across North America, such as Quebec. The stock had plunged from $12 to $6 during the pandemic, but they will get through this pandemic without lasting issues. (SPB was fine, but the market was irrational. SPB is…
TransCanada Corp (TRP-T) Feb 14
Feels very good about it. Due for a dividend increase. Has bounced off the $52 level three times. Still near March lows, but with strong fundamentals. Nat gas prices in NA and offshore are doing quite well. Keystone XL risk is a red herring, as Alberta government has removed the risk. Actively adding. Yield is…
Ceres Global Ag (CRP-T) Feb 12
(A Top Pick April 3/14. Down 12%.) A fully integrated agricultural company with a railroad to their elevators along with production of legumes and wheat. Thinks it should deliver quite nicely this summer because of what is going on in California. Feels drought is going to haunt us from a food inflation perspective.
This is a funny one. The book value is $4.80. They started a few more projects in China. It is not for him, but he can see why somebody would like it.
Waste Connections (WCN-T) Feb 13
(A Top Pick Oct 24/19, Up 11%) They lowered guidance during the lockdown, then revised their guidance back up a few moths later because they saw robust recovery. Waste collection is resilient and will prosper regardless of who will be the US president or trade tensions. SO, WM is well-positioned in a highly fragmented industry…
Bombardier Inc (B) (BBD.B-T) Feb 14
It has really been bankrupt for year, if not for continual government bailouts. Get out of this position. Think of quality US names right now.
Toromont Industries (TIH-T) Feb 14
(A Top Pick Nov 01/19, Up 29%) A mystery since it has done well despite the pandemic. Distributor for Caterpillar equipment, constructions, power systems, etc. Home building is doing well and construction is doing well. Gold mining is also back in full swing. Their customers are having a good year. Scores well on all 3…
Telus Corp (T-T) Feb 14
Best quality in the telecom space. Good, stable cashflow to support the great dividend. TV ads might have been hurt by Covid, but infrastructure remains important with the 5G rollout. Well run, will continue to do well. A close competitor is Telus, but why switch?
Use this list wisely to identify buying opportunities.
Happy trading !!!