Stock Opinions by Paul Harris, CFA - Stockchase Experts
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Paul Harris, CFA

On Stockchase since : Feb 2004

Portfolio Manager and Partner at Avenue Investment Management

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Stock Opinions by Paul Harris, CFA - Stockchase Experts

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COMMENT
General Market Comment 

April 9, 2019

Expectations of earnings have fallen so companies come deliver at those expectations or higher. Bond yields have fallen a lot, reflecting slower world growth, but the stock market has rebounded a lot of in effect saying that the market is fine. The curve rate is flat, and inflation will remain low. In this environment you can still do reasonably well. The risk to global markets is the difficulty in getting out of QE going forward. How can interest rates rise in a strong market? How can world banks create the buffer they need if the economy declines later?
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Expectations of earnings have fallen so companies come deliver at those expectations or higher. Bond yields have fallen a lot, reflecting slower world growth, but the stock market has rebounded a lot of in effect saying that the market is fine. The curve rate is flat, and inflation will remain low. In this environment you can still do reasonably well. The risk to global markets is the difficulty in getting out of QE going forward. How can interest rates rise in a strong market? How can world banks create the buffer they need if the economy declines later?
Unknown
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$0.000
Owned Owned
Unknown

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COMMENT
General Market Comment 

April 9, 2019

REITs REITs are one of the best-performing sectors in Canada lately paying high dividends. Apartment and industrial ones have done very well. Some have done poorly, but they are specific, like Boardwalk which focuses on Calgary. It may be tougher for REITs to generate much beyond yields, though, because they have run up so much in recent memory. Also, there's less capacity of apartments coming on. Lower interest rates are a tailwind.
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REITs REITs are one of the best-performing sectors in Canada lately paying high dividends. Apartment and industrial ones have done very well. Some have done poorly, but they are specific, like Boardwalk which focuses on Calgary. It may be tougher for REITs to generate much beyond yields, though, because they have run up so much in recent memory. Also, there's less capacity of apartments coming on. Lower interest rates are a tailwind.
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$0.000
Owned Owned
Unknown

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BUY
Stryker Corp.(SYK-N) 

April 9, 2019

A great company that makes medical devices and does hip replacements. A surgeon that uses their equipment won't suddenly switch to another brand; the doctor will stay with Stryker. A problem is that sometimes the FDA approves medical devices too quickly--though that isn't a problem with Stryker. This is a good long-term hold.
biotechnology/pharmaceutical
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A great company that makes medical devices and does hip replacements. A surgeon that uses their equipment won't suddenly switch to another brand; the doctor will stay with Stryker. A problem is that sometimes the FDA approves medical devices too quickly--though that isn't a problem with Stryker. This is a good long-term hold.
biotechnology/pharmaceutical
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$195.970
Owned Owned
No

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COMMENT
Cineplex Inc(CGX-T) 

April 9, 2019

Are the Rec Rooms really profitable? Their costs seems high, according to their reports. CGX is competing with streaming companies--not only Netflix, but Disney and others. But they have done a great job increasing their revenue in areas of food. Many people have big TV screens, too, which is another problem. CGX has been creative in bringing opera, live hockey and gaming to its cinemas.
other services
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Are the Rec Rooms really profitable? Their costs seems high, according to their reports. CGX is competing with streaming companies--not only Netflix, but Disney and others. But they have done a great job increasing their revenue in areas of food. Many people have big TV screens, too, which is another problem. CGX has been creative in bringing opera, live hockey and gaming to its cinemas.
other services
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$24.090
Owned Owned
No

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COMMENT
Netflix Inc.(NFLX-Q) 

April 9, 2019

They will be competing with other streamers. Also, they spend $15 billion a year, a lot. However, they proved they can raise prices without losing their audience. But it'll be tougher for them to remain profitable at these levels, given Disney+ coming.
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They will be competing with other streamers. Also, they spend $15 billion a year, a lot. However, they proved they can raise prices without losing their audience. But it'll be tougher for them to remain profitable at these levels, given Disney+ coming.
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$364.240
Owned Owned
Unknown

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COMMENT
Apple(AAPL-Q) 

April 9, 2019

Not expensive, with an incredible balance sheet and tons of free cash flow. The big issue is that their iPhone is slowing down, offering smaller improvements only. Their services business creates less revenue that their phones. So they need to produce product that people will like. It's unclear how they will drive that. Apple can still generate healthy returns and buy shares, but don't expect massive stock price increases like the past. If they can push loyal customers into new areas, like streaming, then there's good potential.
electrical/electronic
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Not expensive, with an incredible balance sheet and tons of free cash flow. The big issue is that their iPhone is slowing down, offering smaller improvements only. Their services business creates less revenue that their phones. So they need to produce product that people will like. It's unclear how they will drive that. Apple can still generate healthy returns and buy shares, but don't expect massive stock price increases like the past. If they can push loyal customers into new areas, like streaming, then there's good potential.
electrical/electronic
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$199.500
Owned Owned
Yes

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WEAK BUY
Cisco(CSCO-Q) 

April 9, 2019

Trades at 16x earnings and has had a good run lately. They have a strong hold on the router market, but they haven't seen as much topline growth as their peers. Instead, they grow by acquisition. A great company that can buyback shares and increase its dividend. But you won't see the same growth as in the past.
electrical/electronic
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Trades at 16x earnings and has had a good run lately. They have a strong hold on the router market, but they haven't seen as much topline growth as their peers. Instead, they grow by acquisition. A great company that can buyback shares and increase its dividend. But you won't see the same growth as in the past.
electrical/electronic
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$55.175
Owned Owned
Unknown

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PAST TOP PICK
Dollar Tree(DLTR-Q) 

April 9, 2019

(A Top Pick Apr 26/18, Up 6%) The Dollar Tree business does very well, but Family Dollar doesn't. There was good same-store sales growth at first, but things fell apart. This acqusition hasn't gone well and recently an activist investor has bought stock and is trying to change the company. Dollar Tree took on too much. He sold his shares.
merchandising/lodging
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(A Top Pick Apr 26/18, Up 6%) The Dollar Tree business does very well, but Family Dollar doesn't. There was good same-store sales growth at first, but things fell apart. This acqusition hasn't gone well and recently an activist investor has bought stock and is trying to change the company. Dollar Tree took on too much. He sold his shares.
merchandising/lodging
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$102.600
Owned Owned
No

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PAST TOP PICK
Bank of America(BAC-N) 

April 9, 2019

(A Top Pick Apr 26/18, Down 2%) Still likes it. Trades at 10x earnings, a little above book value. Pays a 2.2% dividend. They can buyback their shares and increase their dividend at a 21% payout ratio that they can easily take to 40%. They rank 1, 2 or 3 in the industries they work in like investment banking and credit cards. They have a great opportunity to grow businesses as their book value grows rapidly. BAC can--and has--endure a period of flat yield curve.
banks
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(A Top Pick Apr 26/18, Down 2%) Still likes it. Trades at 10x earnings, a little above book value. Pays a 2.2% dividend. They can buyback their shares and increase their dividend at a 21% payout ratio that they can easily take to 40%. They rank 1, 2 or 3 in the industries they work in like investment banking and credit cards. They have a great opportunity to grow businesses as their book value grows rapidly. BAC can--and has--endure a period of flat yield curve.
banks
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$28.805
Owned Owned
Yes

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PAST TOP PICK
Firstservice Corp(FSV-T) 

April 9, 2019

(A Top Pick Apr 26/18, Up 31%) Also a top pick today, so details there. Good managers and type of business.
other services
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(A Top Pick Apr 26/18, Up 31%) Also a top pick today, so details there. Good managers and type of business.
other services
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$117.200
Owned Owned
Yes

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DON'T BUY
CVS Health Corp(CVS-N) 

April 9, 2019

He sold it. It's cheap stock, but the issue is they can't integrate Aetna well. Also, they're considering a new store format from a vertical perspective to become more of a health centre. He doesn't think this vertical integration makes sense and expects more downside until CVS can show something positive from this integration. It doesn't help that American politicians are decrying rising healthcare costs.
specialty stores
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He sold it. It's cheap stock, but the issue is they can't integrate Aetna well. Also, they're considering a new store format from a vertical perspective to become more of a health centre. He doesn't think this vertical integration makes sense and expects more downside until CVS can show something positive from this integration. It doesn't help that American politicians are decrying rising healthcare costs.
specialty stores
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$53.720
Owned Owned
No

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BUY on WEAKNESS
Inter Pipeline(IPL-T) 

April 9, 2019

Pays a steady 8% yield. Trades at price-to-AFFO at 8.2x. But they carry a lot of debt. Net debt to EBITDA is 4.6.x. This is moving sideways, so it's a good entry point.
oil pipelines
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Pays a steady 8% yield. Trades at price-to-AFFO at 8.2x. But they carry a lot of debt. Net debt to EBITDA is 4.6.x. This is moving sideways, so it's a good entry point.
oil pipelines
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$22.010
Owned Owned
Yes

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BUY
The best Canadian oil company and they have integrated purchases well. He's long owned this. The problem is that Canadian oil stocks have lagged the oil price, but CNQ will still benefit from this rising price.
oil/gas
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The best Canadian oil company and they have integrated purchases well. He's long owned this. The problem is that Canadian oil stocks have lagged the oil price, but CNQ will still benefit from this rising price.
oil/gas
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$39.110
Owned Owned
Yes

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COMMENT
Intel(INTC-Q) 

April 9, 2019

Inexpensive at 15x earnings, and pays a nice dividend. But Intel hasn't been at the forefront of handheld devices or servers in the cloud business; Intel hasn't transitioned strongly from the PC world. A well-run company though, but look elsewhere for faster growth.
electrical/electronic
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Inexpensive at 15x earnings, and pays a nice dividend. But Intel hasn't been at the forefront of handheld devices or servers in the cloud business; Intel hasn't transitioned strongly from the PC world. A well-run company though, but look elsewhere for faster growth.
electrical/electronic
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$55.280
Owned Owned
Unknown

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DON'T BUY
He used to own this. It had B- level properties instead of A-. You can hold this, but other REITs perform better. A sleepy company with OK assets but will move sideways. Collect the dividend only.
income trust
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He used to own this. It had B- level properties instead of A-. You can hold this, but other REITs perform better. A sleepy company with OK assets but will move sideways. Collect the dividend only.
income trust
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Paul Harris, CF

Portfolio , Avenue Investment Ma...

Price Price
$4.760
Owned Owned
Unknown

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