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…
Highest immigration to maritime provinces in Canada ever(own lots of properties in maritimes). Excellent dividend yield with discount to net asset value. Superior return to buying a GIC. Would recommend buying.
(A Top Pick Mar 01/22, Down 6%) It is not a REIT but a real estate corporation which re-invests in growth. It is mostly in Western Canada in a segment overlooked by institutional investors. It has made some very good acquisitions. It has compounded at 20% a year over the last 20 years and is…
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.…
Owns shares in company and believes company is executing well. Weathering downturn well. Retail oriented, but adding multi-family units as well. Expecting earnings growth going forward.
Focused on office space in Canada. Challenging sector with Covid-19 and shift in work preferences. Trading at wide discount to net asset value. Steering clear of office space (not sure on future of demand). Stuck at 45% utilization rate in office space. Company does have good buildings (if alternative uses are found).
Atrium Mortgages (AI-T) Feb 13
Largest REIT in Canada. Trades at discount to net asset value. Diversified retail, but has 3/4 of assets in retail. Growing industrial section of portfolio. Is a defensive name with solid yield and growing cash flow. Excellent management team.
Be careful of the real estate space because of rising rates. Commercial properties will have to trade at higher cap rates and therefore lower prices. Treasury bonds have gone quickly from 0% to 4%. He owns short term bonds as cash instead of fixed income.
First Capital Realty (FCR-T) Feb 13
Another defensive real estate company. Owns best grocery shopping center portfolio in North America. 85% of tenants are necessity based retails(grocery etc.) Has been trading at a discount to peers and net asset value. New leases has been growing. Company has been buying back shares and selling assets to increase value.
Manulife Financial (MFC-T) Feb 13
It always trades in the same range. What kind of value is being created? Can't seem to deploy excess capital efficiently. See his Top Picks. Don't be seduced by the dividend.
Focused in Canada and USA. Always trades at a discount (net asset value and earnings multiple). Externally managed with good assets. Better opportunities in REIT sector.
Smart REIT (SRU.UN-T) Feb 13
A defensive chapter within the retail story. Pristine balance sheet. 1/3 of space anchored by WMT, a strong leasing partner. Selling on-site condos, and immigration keeps demand high. Yield is 6%.
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Strong performance in asset management. Growing profits despite higher mortality rates. Increased dividend by 20%. Premium valuation justified. Unlock Premium - Try 5i Free
TMX Group (X-T) Feb 13
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research Business model provides market ‘hedge’. Gaining market share via acquisitions. Increased dividend by 8%. Attractive valuation compared to history. Unlock Premium - Try 5i Free
It is spinning out its asset management business. Let the market set a price as to the value. This is a positive thing.
Fairfax Financial (FFH-T) Feb 14
It is great business and has made good private investments. The share price is very strong relative to the market.
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.
Likes transition company is making into many assets. Looking into USA sunbelt and industrial assets. Selling office spaces and re-developing others. Work in progress and success will depend on management execution. Hold shares if already own.
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,…
(A Top Pick Oct 05/21, Down 50%) Shares have been beaten unfairly. It's a discretionary luxury retailer. Some feel that demand for luxury goods has been satiated, but GOOS' parks are essential outwear. Plus, it's an iconic brand. Also, they are expanding in the US and Europe, though bumpy in China. Sales are fine, though…
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…
Struggling with core Timmie's franchise in Canada. Limited inroads in US. Tim's accounts for around 40% of EBITDA operating profit. Not much menu innovation. Traffic hasn't recovered to pre-Covid levels. Interest rate hikes dampen fire power for further acquisitions. Don't buy.
Yellow Pages Ltd (Y-T) Feb 11
Fast food faces rising supply and labour costs and maybe a weakening consumer, but that consumer may be trading to into fast food. Fast food tends to offer stable demand. This stock has come off a lot (QSR too). A&W pays a 5% dividend yield. An interesting company. He's patient and watching this.
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.
They have a lot more discretionary goods in their mix due to an acquisition, and discretionary spending will weaken as we enter an economic slowdown. Also, consumers have bought a lot of durable goods during Covid. Their e-commerce was terrible before, but is now good. Watch the consumer next year.
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 8%) Will continue to hold as still thinks a strong company. Currently trading at 2x earnings. Stock very attractive at current price. Volatility in lumber pricing creating opportunity for long term investors.
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
What's wrong with this? US housing has ground to a halt. Lumber prices are way off. China has been shut down, so lumber demand collapsed short-term. He expects interest rates to continue to rise and pressure housing. China is reopening now though. WFG is a highly cyclical and unpredictable stock. Earning can soar and plummet.…
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
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Long-term demand supported by new housing. Heavily dependent on the commodities market. Good financials and growing asset base. Diverse revenue mix. Unlock Premium - Try 5i Free
Barrick Gold (ABX-T) Feb 13
Producers have had problems with labour and input costs as well the declining price of gold. Think of gold as another currency. He would need to see gold at $2000 before getting excited about it.
Not a blue chip, long-term holding. Doesn't work all the time. For a trade over the next 2-3 years, it could be a top pick. Benefits from US semi capacity, building a plant in Arizona. Litigation. Balance sheet better. Dividend very nice, well funded. Buy for dividend and upside. Yield north of 7%.
Kinross Gold (K-T) Feb 13
Will the price ever recover? If gold recovers, then it will. Some issues to work through. He prefers the bigger gold stocks at the beginning of the cycle, such as AEM, ABX, and NGT. Those ones will move first. You can then drop down to the intermediates as the cycle matures.
$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.
Stockchase Research Editor: Michael O'Reilly The Vancouver based diversified natural resource company (including copper, steel, gold and fertilizer) with an $18 billion market cap is a TOP PICK. It trades under book value and at only 5x earnings. EPS has grown by 33% annually over past three years. Its ROE is impressive at 23%. It…
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…
He owns no copper producers. Where the economy goes, so does copper--and the economy is slowing down globally. This doesn't bode well for copper demand, and FM is strongly linked to copper prices. Don't catch a falling knife (copper stocks).
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
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Large acquisitions expand addressable market. Controversies and approval weigh on stock. Remains a high growth company. Valuation attractive relative to peers. Unlock Premium - Try 5i Free
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…
Great story for a number of years. Paid a lot for a big acquisition. Valuation has compressed. Lots of free cash. Great margins, operates profitably. Tempting to load up at these levels. Tough ride, don't throw in the towel, hold on.
Shopify Inc. (SHOP-T) Feb 12
Has since sold shares in company. Company does not have consistent returns on capital (has been negative the past 10 years). High revenue growth does not equate to return for shareholders. Unsure whether company will be able to generate free cash flow. Is a speculative stock. Untested business model.
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.
Great management team with high discipline in capital allocation. Lower valuations in recent market selloff has allowed company to make good M&A decisions. Company has good financial position (large cash flow and low debt).
Overly beaten up. E-commerce for large corporations, such as Click & Collect. E-platform lets people bid on government contracts. IT labour shortages, high capex for acquisition. Dirt cheap. Activist shareholder should unlock value. Stock could see $6. No dividend.
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
Stockchase Research Editor: Michael O'Reilly We reiterate PSK, a oil and gas royalty, generating strong cash flow, as a TOP PICK. The company avoids the capital investment treadmill of a traditional oil and gas producer, yet it has tripled its acreage exposure over the past eight years and has used its free cash flow to…
Is a long term shareholder of the company. Given strength of energy prices, is a very strong company. Politically stable country. Large amounts of cash flow generation. Very high quality name with good management team. Would recommend buying.
Cenovus Energy (CVE-T) Feb 13
Believes energy companies are capital intensive business models that don't control price of commodity. Hard to know future of the business. Expect high volatility in share prices. High shareholder return for energy companies with high oil prices. Unsure on future of business (speculative).
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
Short? Reticent to short. Past year has seen demand for drilling and day rates go up, and this should persist for a while. Good performer. Content to hold.
Superior Plus Corp (SPB-T) Feb 14
High dividend but has challenges with the price of propane (high volatility). CEO retiring is worrisome. Earnings revisions and stock price has fallen. Lots of uncertainty with business. Thinks better companies out there.
TransCanada Corp (TRP-T) Feb 14
Pipelines are a good place to be in this tough market. Nat gas tailwinds. Really defensive. New purchase will be accretive in time. Lots of projects for growth. Trades at an undemanding 15x. Yield is 5.63%, with 4% dividend growth. (Analysts’ price target is $69.44)
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
Issues around balance sheet, leverage, and selling assets. Struggling to have positive earnings. Look to other names for industrial exposure, such as WCN, CP, or CNR. All 3 of these names have good long-term economic moats, generate free cashflow, fairly high quality, can see earnings growth over time, and have sold off with the market.
Toromont Industries (TIH-T) Feb 14
(A Top Pick Apr 08/22, Down 13%) Disappointing. Concerns on slowdown of the economy. 40% of revenue comes from maintenance and support, so it's less cyclical than others. Still likes its fundamentals. Good backlog. Should benefit from government infrastructure spend during a slowdown.
Telus Corp (T-T) Feb 14
Telcos are right up there in his dividend strategy. Don't buy it if you think interest rates will continue higher, but he thinks we're getting to peak hawkishness. Attractive time to buy, as you might get the tailwind of falling rates next few quarters.
Use this list wisely to identify buying opportunities.
Happy trading !!!