This week there were 21 Stock Top Picks and 6 ETF in a wide range of industries: Energy, Financials, Basic Materials, Healthcare, Industrials, ETF and Consumer.
It is one of the two main trophies. It has gone sideways since 2008. It goes up 50% and down 50%. This is a very volatile sector. You have to take advantage of the lulls when the stock is cheap.
Pembina Pipeline Corp (PPL-T)
Top pick for many years for him. A quality name. They don't have the headline risk that Enbridge and the others have. The problem is that their growth is slowing and it is getting expensive. Still trading at 9.4% 2023 free cash flow. Nice dividend.
Imperial Oil (IMO-T)
Exxon owns 69% of this. There have been some recent project cost overruns. There is nothing fundamentally wrong with this company. Pipeline issues may be influencing investor sentiment on how their production is going to get to market. At these levels he is looking at it harder.
Crew Energy Inc. (CR-T)
Book value is $5.74. Debt is not a problem: $349 million debt compared to $830 million in equity value. 26% liquids and oil, 74% natural gas. $7 target in the next 12 months. He expects it to drop a little in tax-loss selling season.
Surge Energy Inc (SGY-T)
A mid-cap producer. They reduced their capital budget yesterday as a reflection on prices. He'd like to see them reduce their debt even more.
Touchstone Exploration Inc. (TXP-T)
It is in Trinidad. They are drilling deeper wells for the first time and are 100% oil, presently. Their first target from here is a gas well. If they are successful the development drillings will be massive. His target is $0.50 and $2 in the cycle. This is his small cap recommendation today. (Analysts’ price…
Arc Resources Ltd (ARX-T)
(A Top Pick Jul 03/18, Down 49%) The company made the same amount of money in Q1 as last year. He is perplexed by the market sentiment. The dividend is over 9% and he thinks they will not cut it at current oil and gas prices. Oil accounts for 70% of their cash flow. A…
Whitecap Resources (WCP-T)
He thinks $62 WTI may be pretty balanced here. Whitecap raised their dividend. He thinks they have run a tight ship and they are generating good cash flow.
They have a great asset type, focused in the US. But we have seen no cash flow increase in a couple of years. The management team is great.
H&R Real Estate Inv Trust (HR.UN-T)
At these levels the valuation looks attractive. The dividend is safe. They don’t have as high a dividend growth outlook as other REITs though. A good hold for a diversified portfolio.
ECN Capital (ECN-T)
Recently bought the stock. This is the 1st day that Element Financial shares are formally split into 2 companies, ECN Capital (ECN-T) and Element Fleet Management (EFN-T). Thinks both are undervalued. He tends to do this in terms of the Price to Book ratio. The BV is more or less about $4, so if you…
🛢 Basic Materials
Long on this stock and Sell the February Calls options for $1.10. He gets $2.77 yield for the options for less than a month. He makes 4% and they expire on Saturday.
Nutrien Ltd. (NTR-T)
Fertilizer markets are oversupplied, so fertilizer prices remain low, though slowly recovering. NTR is expanding its retail network through small acqusitions across North America, but also Australia and South America. The latter reduces cyclicality risk in North America. (Analysts’ price target is $82.44)
He's lost money on this. A complicated company. Their pharma operation is easy to understand, but Amazon poses a big risk to these companies. Big.
Pfizer Inc (PFE-N)
It is a safe dividend play. He looks at total return so dividends are important but recommends you don’t get caught in a dividend trap where there is capital at risk. A lot of dividend payers have moved their valuations to historical high levels. You have to be careful.
He likes the company. Has owned stock of it in the past. Overvalued now trading at 12 times EBITDA. Excellent Management team at execution. He would look at it if it comes back at 10 times EBITDA.
United Rentals (URI-N)
A company that works beautifully into the infrastructure improvement and the rental market. If you are patient, you should see the stock move higher. Trades at a very modest multiple because it is deeply cyclical.
United Airlines Holdings (UAL-Q)
He didn't own an airline until he bought this recently, because airlines were do cyclical. But now the airlines operate so precisely through tech and operate at full capacity far more than before. So, revenue-per-mile is high. This trades at a cheap 8x earnings which are growing. The Boeing 737 Max problem would impair UAL.…
An actively managed bond ETF? It makes sense to have some of your bonds actively managed. He just spoke to the manager of this ETF and he's looking at the shape of the yield curve and managing expectations.
BMO Ultra Short-Term Bond (ZST-T)
This has lagged, because basically you are holding T-bills and equal-end type instruments. When you’re starting at 1%, there is not much room for price appreciation. This is more of a cash alternative as opposed to a bond alternative.
SmartBe Global Value Momentum Trend Index ETF (SBEA-NEO)
Less than a year old. Doesn't trade a whole lot. It moves from one asset class to the other depending of trend. It's a trend following product. If you think the markets might be in for a choppy ride, this is the kind of product that will allow you to trim the equity exposure if…
iUnits S&P/TSX Capped Energy ETF (XEG-T)
A bit tricky in that Suncor is a big part of it. If you really believe and want to invest in oil, particularly in Western Canada, the guys that are going to get the biggest kicks are the ones that have been hammered down. The boys out West have done a really good job in…
BMO US High Dividend Covered Call ETF (ZWH-T)
BMO Covered Call Cdn Banks ETF (ZWB-T)
He likes the Canadian Banks now. Recommends buying it together with BMO Covered Call Utilities ETF (ZWU-T) to provide stability to the portfolio.
A+ management. One of the best performers on the TSX for the past decade. They continue to take market share, but the multiple isn't cheap. They're the only stock to play collision repairs, which is a highly fragmented space. They make highly accretive acquisitions. He holds a big position.
Aritzia Inc. (ATZ-T)
He likes this. Every time he goes to the mall, these stores are full, while competitors’ stores are empty. It was probably priced aggressively when it was sold to the market, because it was an exciting growth story. Then we got into Amazon, and everybody hates retail, which is what has really hammered this company.…
Tapestry Inc. (TPR-N)
Still a great company. This was such a great story for the longest time. From what he understands, their issue is that to some degree they have diluted their brand. Counterfeiting of Coach is rampant in Asia. They have also been known to do very large sales on their goods, which has cheapened their cachet.…
This post summarizes the top picks weekly. The previous week’s stock picks list is available for an additional week using the link below. Refer to Daily Top Picks available in the All Top Picks pages to browse the all-time top picks archive.
Use this list wisely to identify buying opportunities.
Happy trading !!!