Aurora Cannabis, Canopy and More Earnings this Week (Feb 11-15)
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
Lots of opportunity in the US. Guilty of using easy money to build massive facilities. Big writedowns. Big equity offering. Doesn't see an imminent big export market. Longer term potential, but it's an outside probability.
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 millionaire stock? Vivid imagination. Hasn't made a penny to date. Balance sheet is sloping down, as it's consuming equity. Every time it takes a run, many people run for the exits. Pure speculation, a gamble, fluctuates wildly. Doesn't see the earnings or explosive growth in the Canadian market.
Canadian Tire Reit. 92% of rent comes from Canadian Tire and almost 70% of the stock is owned by Canadian Tire. Stable 5% yield. Premium to NAV.
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…
He's never really liked CAP.UN. His proxy is KMP.UN, focused in Nova Scotia. Growth profile of immigration coming into Halifax.
It's the only real estate company he's ever bought. Different from a REIT--they retain their capital for growth. They're active in western Canada, buying small buildings then improve them. They face little competition from REITs. MEW is not known on Bay Street, because the owner owns half the stock. Hard to find sellers of this…
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.…
TCN has a unique concept, single-family rentals south of the border. Lots of traction. Valuation too hot. Long-term scalability might be tough. For good value and a higher dividend, look at AX.UN, BEI.UN, or REI.UN.
(A Top Pick Apr 08/21, Down 4%) Very specific and good at what they do. Unique assets that tie in to smaller businesses like tech firms. Management's one of the best. "The Well" is leased up completely, and will add to earnings.
Atrium Mortgages (AI-T) Feb 13
Stable income provider you can add to any portfolio. Likes it. Great real estate nationally. Biggest tenant is Loblaw, so it has a secure cashflow. An element of growth, which is unique, from the industrial sector. Nice combination of safety and growth. Hold, sleep well at night with the distribution yield.
Another company with a great long term track record with a short term stumble, because of the growth stock sell-off. It has sold off 25% but earnings estimates are up 10%. It is an attractive opportunity since the price is detached from the fundamentals. Buy 6, Hold 1, Sell 0. (Analysts’ price target is $199.95)
First Capital Realty (FCR-T) Feb 13
He had avoided the retail space but is now bullish on necessity-based shopping and that is what they address. The stock has been depressed because cash flows came off during the pandemic and they cut the distribution temporarily for probably two years. It is trading at a big discount to net asset value. He likes…
Manulife Financial (MFC-T) Feb 13
(A Top Pick Jun 09/22, Down 8.5%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with MFC has triggered its stop at $21.50. To remain disciplined, we recommend covering the position at this time. This will result in a next investment loss of 10%, when combined with previous buy recommendations.
Tough to own. Retail, office, some industrial. Deep value, but doesn't see a catalyst. He's not a buyer of enclosed mall office or retail.
Smart REIT (SRU.UN-T) Feb 13
He owns the bonds. Retail nature doesn't fit his criteria. One of the better retail assets out there, anchored by WMT, a very strong tenant. Adding condos, rentals, and developments. He's hesitant to get back into retail. Not a bad entry point.
Financial statements not indicating catalyst for share appreciation. No major problems with company. Is one of the better insurance companies in Canada. Entry into the US market has been good. Rising interest rates is good for insurance business.
TMX Group (X-T) Feb 13
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Growth is expected to slow down to 5-7% in the next three years. Margins could see some pressure from higher operating costs and higher amortisation. It benefits regardless of sentiment change or interest rates hikes. Still attractive overall at 17x earnings. Unlock Premium - Try 5i Free
It's fallen beneath its 200-day moving average, so have many stocks, but is falling lower than the TSX. Is exposed to infrastructure, which is good, but real estate, which is having a tough time.
Fairfax Financial (FFH-T) Feb 14
Believes company investments have not done well (Blackberry etc.). Insurance business should preform well. Not surprised company is being rated poorly by the market, given management concerns.
Strange fee structure. Be cautious in that India has little corporate governance. Better way to participate in EM is to own some of the great global companies, like Unilever, that benefit from the growth there and follow expected corporate governance.
Diversified portfolio and has done good job of rationalizing it. Will it be able to close the gap to NAV? A 'show me' story.
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,…
Stockchase Research Editor: Michael O'Reilly Summer is not the time to think about parkas, but it is a great time to buy the stock of GOOS. Recently reported earnings beat expectations and recorded the company's record sales of over $1 billion and management guidance expects $1.3-$1.4 billion in 2022. Online sales margins are 76%. Non-parka…
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…
Needs vs. wants. Tim's is the vulnerability at 40% of the operating profit, and 25% below pre-Covid. Many people are not back in the office. Popeye's has plateaued. Challenging macro backdrop.
Yellow Pages Ltd (Y-T) Feb 11
Nice recovery from Covid. Massive increases in price of raw materials and labour. Will they be able to increase margins? Will consumer be forced to come down market and boost their business? Yields are very attractive. After the recent run, all stocks should pull back, so he's watching the space.
It is an amazing stock. Historically it has peaked 3 times at 2 1/2 X Book and then falls. It is back up to its peak again so time to sell.
He just added this. It's a cheap large cap. CTC sold a lot of outdoor furniture, which was a pandemic bump. They did a great job with supply chain management. Their loyalty program gets cross-selling among their businesses--very good. They're very shareholder-friendly by raising the dividend. Same-store sales growth may be less strong vs. last…
D-Box Technologies (DBO-T) Feb 14
A disappointment. Pandemic has been the nail in the coffin for movie theatres and DBO's motion systems. Simulation and industrial segments have been profitable. Treading water right now. Long road ahead. Wait and see before stepping in.
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 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 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
(A Top Pick Mar 17/22, Down 11.2%)Stockchase Research Editor: Michael O’Reilly Our PAST TOP PICK with WFG has triggered its stop at $108. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 4%, when combined with the previous buy recommendation.
He considers forest stocks to be a hold. He is lightening up on his position. You should buy commodity products when they are not at a historic high like now.
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
ABX vs. AGI Agrees that gold is going higher. Doesn't own ABX or AGI. If you believe gold is going higher, do you want the high torque name, or the big diversified large cap? The answer depends on your conviction in the direction of gold. His firm is conservative, so they'd pick ABX. ABX has…
It was probably mismanaged, but the new manager is turning the company around. They cut the dividend 2-3 times, now paying 8%, though it may fall to 6% next year as the stock itself rises 25-30%. The street targets as high as $12. One business is hydrochloric acid, used in oil, so this business should…
Kinross Gold (K-T) Feb 13
The gold trade is comparatively better, but the last year and a half has not been good. It is range bound. Recent highs won't be seen for a while. The competition from crypto as an alternative inflationary hedge compared to gold has pulled a lot of money out of the sector. Thinks it will come…
$2.25 price target. Growing pains starting up a mine. He'd be averaging down. Issues always signal a really good entry point at cheap valuations. Have to be patient. This wouldn't be his only holding; he'd own it amongst at least 5-10 companies.
Getting to the right theme is the most important thing. Has a good basket of assets. Recently pulled back. It's a small cap, so you have to be careful. But it should continue to participate as long as base materials continue to improve.
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.
Is a good company to hold long term. Minerals are going to be in demand looking into the future. Recent market selloff has had negative affect on share price, but believes this is short time.
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. EPS at $0.14 beat estimates and revenues also beat estimates. While they did not generate positive free cash flow in the last quarter, they have been cash flow positive over the past few years. Balance sheet is strong and the current multiple is 7x forward…
Goldcorp Inc (G-T) Feb 14
Lundin Mining Corp. (LUN-T) Feb 14
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. They announced an acquisition today with a total implied equity value of $625M. The move should expand their copper and gold production. The deal is a net positive for the company and 5i believes it will help them expand in the long term. Unlock Premium - Try 5i…
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.
Recently rotated a lot of our precious metal allocation to silver instead of gold. More of a long-term industrial use with the electrification of the world. Precious metals in general should be alive and well for years to come.
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
With market volatility, gold stocks tend to be more volatile than the overall market and than gold itself. In this choppy period, he'd take it off the table right now. Deal completion risk and market volatility risk.
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…
Neutral on it. Cloud-based communications as a service. Buy in thirds here at $11, 10, and 9. 12-month analyst target of $17.25. Better opportunities elsewhere.
Shopify Inc. (SHOP-T) Feb 12
SHOP vs. AMZN Both have extremely long runways. In uncertain times, he'd rather recommend a megacap like AMZN, which has more defenses if we were to go into a recession, and that's a big "if". SHOP at $338 US is an absolute bargain. He has a 5% position in AMZN, one of his top 5…
Very profitable. ROE is around 30%, and has been high for a long time. Company has never used its potential to expand the business faster. Great value, but buying back stock at a high valuation. Go elsewhere.
Not convinced they'd do a stock split. Top stewards of capital and acquisitions. Trading just below what he'd consider a stop level. See his Twitter feed (@SC_FUNDS) after the show for an example of a stop loss for CSU.
Likes business and will continue to hold shares. Expecting recent acquisitions to pay off well. Share price presenting good opportunity to buy. Expecting valuation of shares to rise.
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
Believes company was over valued at IPO. Good management team that has been buying back stock and paying down debt. Thinks there are other Canadian energy stocks to hold. Not undervalued enough to justify investment.
(A Top Pick Mar 24/20, Up 1376%) Big beneficiary of nat gas LNG on the west coast. $20 target on it. Will be out of debt by the end of this year, lots of free cashflow, unhedged. Premier company. Potential takeover. A buy on any weakness. He sold on recession concerns.
Cenovus Energy (CVE-T) Feb 13
If you believe the oil price will hold, then CVE should do well. She owns no oil stocks. Oil prices are flattening, because of fears of a recession eroding oil demand. A caveat.
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
In the midst of a bidding war. More of a hold than a buy. Prospects for material upside are not very high. Better opportunities elsewhere. If you made profits, take some and invest in something like GEI or even TWM, if you have a higher risk tolerance.
Precision Drilling (PD-T) Feb 14
(A Top Pick Aug 10/20, Down 0.19%) Resurgence in energy industry after pandemic has created bull energy market. Will continue to hold shares, as believes company will benefit from increase activity in energy market. Strong company that is well managed. Good balance sheet.
Superior Plus Corp (SPB-T) Feb 14
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The revenues were ahead of estimates by 14%. EPS was 40 cents, beating the estimated 33 cents. Q4 showed some income declines however. The acquisition plan backed by Brookfield has not changed. The dip is a buying opportunity. Unlock Premium - Try 5i Free
TransCanada Corp (TRP-T) Feb 14
(A Top Pick Feb 02/21, Up 21.3%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with TRP has triggered its stop at $67. To remain disciplined, we recommend covering the position at this time.
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
Management sees great opportunities ahead. Wants to make more renewable landfill gas sites. Benefits from higher oil prices. Defensive, safe. Excellent management, clean balance sheet. He expects double-digit revenue growth for many years. Also a reopening play. The dual listing is a gift to Canadian investors. (Analysts’ price target is $178.80)
Bombardier Inc (B) (BBD.B-T) Feb 14
Toromont Industries (TIH-T) Feb 14
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.
Telus Corp (T-T) Feb 14
Best in class for margins, growth, cashflow generation. Premium multiple. Take profits. If you like 5G and increase in data consumption, you're better to buy the tower operators like AMT, CCI, and SBAC. All 3 are down on the year, but growth profiles are robust.
Use this list wisely to identify buying opportunities.
Happy trading !!!