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.
It continues to stay in this valuation range. They are in the home medical business. They operate in ten states and have 40 locations. It is a fragmented industry. They have 68% recurring revenue. They have a huge opportunity to consolidate. They can grow through valuation multiple growth and organically. (Analysts’ price target is $2.36)
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…
For years NEPT was in partnerships where they were extracting Omega-3 oils from krill oil and selling that to consumers. Now they're taking that extraction technology and applying it to the cannabis oil market. He's in a wait-and-see spots. The fundamentals don't back the move up in the stock. He has a small short on…
Canopy Growth Corp. (WEED-T) Feb 14
He has looked at the US or niche producers in Canada. This would be the best of the Canadian producers, though. He feels they will be the dominant leader without question.
They will probably have no trouble collecting their rents. Their business will be challenged by the AMZN-Q model. He would not chase them here as they are expensive.
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…
You are looking at quality assets in a quality sector. It is trading at quite a discount to NAV. It has a young portfolio. Every time a tenant leaves their suite you have to put in dollars and the older the building the more you have to put in. He owns it and has been…
(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.
He likes it for being in multi-family rentals. It's challenged because it's controlled by Morguard Corp. Diversification is 43% in Canada, 57% in the United States. Nice dividend. Probably worth $22/share. But there's better value elsewhere like CAP REIT or BSR.
Their difficulty is the retail spaces and all the variable that will influence its future value. A very difficult environment for malls as growth in sales is not there. Stay away. Look for apartment REITs instead.
He is a big fan of this company and likes their management team. Their own risk management tolerance is low. A lot of buildings in Toronto and Vancouver, but they also hold office space in tight markets. They find older buildings and turn into nice new spaces. The balance sheet is healthy.
Atrium Mortgages (AI-T) Feb 13
It has L-T as their largest tenants. He thinks very highly of management. The stock is pretty well valued today. It is a very safe company.
A large company in commercial real estate. Barely pays a dividend, but offers an 11% free cash flow yield that's and growing 91% YOY. It trades at 8x trailing cash flow and boasts a big 25% return on capital in Q4. Earnings to grow 11% in 2020. (Analysts’ price target is $107.83)
First Capital Realty (FCR-T) Feb 13
They are in the retail space. Anything that is in the retail space during COVD-19 is in the penalty box and for good reason. The pandemic has shut down traffic to every shopping mall. Their shopping centers are a victim of online sales. The growth outlook has been diminished. He thinks the market has overly…
Manulife Financial (MFC-T) Feb 13
(A Top Pick Jul 11/19, Down 19%) MFC is hurt by very low interest rates; all financial stocks are. Short term this will hurt earnings, but long term he likes their huge AUM across Canada, America and Asia. Their Asian operations will see rising demand from the Asian middle class needing insurance. Since the recession,…
Apartments in Ontario and the US sunbelt. MRT is pretty illiquid, but has performed very well. She'd rather play Ontario and the sunbelt separately (i.e. Minto REIT for Ontario). They have a decent balance sheet so they can continue to pay debt and grow by acquiring. No headwinds here. Expect higher dividends.
Smart REIT (SRU.UN-T) Feb 13
It is safe in terms of distribution. They have exposure to Walmart, so in terms of cash flow it is safe, however they have zero growth. They have quite a bit of leasing to do. They have a good management team and some exciting developments. (Analysts’ price target is $20.75)
(A Top Pick Jun 17/19, Down 4%) It is an extremely strong company within the lifecos. They have good growth in global markets. Stick with it.
TMX Group (X-T) Feb 13
(A Top Pick Jun 24/19, Up 42%) It has built on its platform. It has benefited from this volatility. If the market recovers, companies will be taking the opportunity for secondary offerings. They can make acquisitions going forward. It is an attractive opportunity.
It is an extremely complex company. He admires that it is at the top of its pyramid. They have done an outstanding job. It is probably a fairly good investment in the long term to come.
Fairfax Financial (FFH-T) Feb 14
It has wide swings with respect to its earnings profile. Its insurance operations have been fairly steady. You will see more volatility in the stock short term, yet there has been a lot of management buying of the stock. It is a very well managed company that will continue to do well.
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.
It has been a very difficult stock to own. It just cut its distribution in half. Management hopes they are being over cautious. Mall tenants are only paying about 25% of the rents. They have quite a bit of exposure to oil and gas tenants. Your upside is much better than your downside. Their apartment…
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,…
He does not own it because it is a volatile stock. It has been hurt badly by US/China tensions. It is very well managed and they are smart on how they are handling their inventories. They are focusing on their own stores because they are three times more profitable than going through other retailers. It…
He owned the stock at one point. It is a cash cow. It is mostly a marketing company. The question has always been if the parent will privatize the company. They pay a good dividend but there is very little growth. Hang on if you are in it for the long term.
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…
It boasts $34 billion in sales from 27,000 restaurants in 100+ countries. We know their franchises, including Horton's, Burger King and Popeye's. 99% of stores are owned by franchisees, so it's capital-lite for QSR. Menu innovation is a driver with meatless burgers at Burger King and the spicy chicken sandwich in the U.S. Acquisitions through…
Yellow Pages Ltd (Y-T) Feb 11
The payout ratio is bumping on 100%. It is reasonably priced but has rolled off to get here. He would be concerned about the dividend.
It has not picked up to the same extent as HD-N. We are dealing with a general consumer related store whereas HD-N has benefited from the home renovation space because at home what else are you going to do with your day when shut in but renovate. As stores start to re-open again and assuming…
He has never purchased this, even though watching it for along time. The recent price rebound may be getting ahead of itself again, he thinks. The company has good assets and strategy, but is fighting an uphill battle in how retail is changing. They have done a good job on the dividend yield given how…
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
You want to buy cyclical at the end of a recession, but you have to be careful and selective. You don't want the ones with the most torque to recovery. CFP-T would be one to select. It will be around.
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.
Insiders were buying during their strike last year, then again this March. It is still attractive. This company has had a very consistent track record in terms of profitability. It trades at a discount. (Analysts’ price target is $1.05)
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 huge gold company. He took a good look at them two years ago and then last week, and he feels KL-T is the best premier gold company in Canada. He thinks all gold companies will benefit if gold does what he thinks it will do.
He owns the convertible debentures. It is a speculative position. They should be able to withstand this.
Kinross Gold (K-T) Feb 13
The earnings were good. He just doesn't like these big companies. He has done better with the other producers. He would go with Agnico that presents a better value. (Analysts’ price target is $9.25)
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.
The company has some projects underway that will increase their cost profile going forward. They will be doubling their throughput. They are moving to also increase their production of copper.
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…
A risky stock that’s driven him nuts. He bought it around $10.96. It’s finally breaking out. Copper stocks could do well although his exit price is around $11 which could move up depending on how it performs. (Analysts’ price target is $15.47)
Goldcorp Inc (G-T) Feb 14
Lundin Mining Corp. (LUN-T) Feb 14
Their South American deposits are huge and demand billions of dollars in capital to build. They are copper-centric, and copper prices are low now. It's a great speculation over five years. Not for the short term.
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…
A growth by acquisition story. He sold in the Q4, though he wishes he still owned it. There's no big catalyst for this stock, but it will continue to perform.
Shopify Inc. (SHOP-T) Feb 12
3200x forward PE. Blended 12-month PE is still 1800x earnings. Has done well, but expensive. Pandemic has fast-forwarded the push for e-commerce by 10 years. Growth rate and earnings look as though they'll be strong. Other names give you more quality and value. Tricky to buy it at this level.
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.)
It is his largest position and he has owned it since 2014. The management team is one of the best on the planet. They continue to acquire and integrate software companies. Roll up strategies can be disastrous, but some do it very well, not getting distracted. (Analysts’ price target is $1598.11)
They provide and manage e-commerce platforms for Sobeys, IGA, Carfor and others. Trades at only 1x revenues vs. Shopfiy at 40x. They just raised capital to acquire smaller players. (Analysts’ price target is $7.40)
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 definite lid at around $85 and recently broke through. From a technical perspective that is very bullish. The chart looks pretty good now.
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
(A Top Pick Apr 25/19, Down 53%) They sold out when they were stopped out last July. It is tough in the energy space right now. Investors have to avoid trying to be a bottom feeder and trade with tight stop loss levels.
Has a decent balance sheet with a good cash flow. They've lowered capex, but will spend in Q4 when oil prices should rise for the winter. Buy this under $1. His one-year target is $4. But this when WTI falls below $30 this year, as he predicts. (Analysts’ price target is $2.20)
Cenovus Energy (CVE-T) Feb 13
The unique thing is their cost profile -- it is very low compared to peers. The trouble for CVE is getting their production out of Canada. That is why he favours pipelines over producers. There is too much commodity price risk, so he would not be a buyer. You might want to consider EGO instead…
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
Weakness in share price recently is related to their moving HQ into the US. Their strategy for the move is to trigger share buying in the US as they become part of a larger market index, he thinks. There is no guarantee this will happen in the US, so this is a pretty risky strategy.…
Inter Pipeline (IPL-T) Feb 14
He sold it two years ago. They cut their dividend 70% in April which surprised many. A lot of their revenue was contracted and not so much exposed to oil prices. They were building a propane processing plant in Alberta, but this $4 billion project strained the balance sheet. The current dividend is sage, and…
Precision Drilling (PD-T) Feb 14
Expect less drilling activity but they will survive. They have first-class equipment in the US and Canada. It's a higher-beta name, thus more speculative. Buy this on weakness. He expects drilling to pick up in 2021.
Superior Plus Corp (SPB-T) Feb 14
The company has good businesses. Their problem was the balance sheet. They will be 3 times debt-to-EBITDA. They have more funds for M&A, which could help them make some interesting acquisitions. He likes the distribution and the management team. They just partnered with Brookfield, which gives a strong vote of confidence. Its valuation is reasonable.…
TransCanada Corp (TRP-T) Feb 14
Sell Banks for Pipelines? He likes this strategy. Balance the weight between both he suggests. Pipelines are economically sensitive these days, due to their weightings in the energy ETFs. ENB, TRP and PPL have been particularly sensitive. He thinks the valuations warrant investment here.
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 tricky one. He's torn. It checks most of his boxes, but not one: they hold a lot of debt. Their growth has been spectacular, but fueled by debt. He doesn't know the debt repayment details offhand. He prefers a stock with less debt. That said, the garbage business will be stable during this pandemic.
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
He holds this one since 2015 and no intention to sell. They hold the rights to Caterpillar dealerships, now into Quebec and the Atlantic provinces. Most of their revenues come from mining, construction and farming. Fiscal stimulus could aid infrastructure, so construction could also do well. Mining should be okay for precious metals. The management…
Telus Corp (T-T) Feb 14
BCE and Telus Owning either is fine. It's splitting hairs to choose one over the other. Tech stocks are the big focus of investors now. The current 5% dividend yield + 5% dividend growth rate = your likely return. Be patient with them, because these stocks won't leap in a given day. Positives: both are…
Use this list wisely to identify buying opportunities.
Happy trading !!!