Stock Opinions by David Driscoll - Stockchase Experts
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David Driscoll @

On Stockchase since : Oct 2000

President & CEO at Liberty International Investment Management Inc

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Stock Opinions by David Driscoll - Stockchase Experts

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COMMENT
General Market Comment 

January 17, 2019

What's today's rally due to? On the back of tech selling last year, people are sitting cash and jumping back in. His concern is that don't forget US firms had benefit of tax cuts last year. Now they have to show real earnings, not something artificial. Last year was similar to 2011, where there was a correction of 20% and then 5 years of straight up. He has 20% cash, so still being defensive. If a portfolio manager can beat the benchmark by about 2% after fees, they've done well.
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What's today's rally due to? On the back of tech selling last year, people are sitting cash and jumping back in. His concern is that don't forget US firms had benefit of tax cuts last year. Now they have to show real earnings, not something artificial. Last year was similar to 2011, where there was a correction of 20% and then 5 years of straight up. He has 20% cash, so still being defensive. If a portfolio manager can beat the benchmark by about 2% after fees, they've done well.
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David Driscoll

President , Liberty Internationa...

Price Price
$0.000
Owned Owned
Unknown

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COMMENT
General Market Comment 

January 17, 2019

Do you see the rally continuing for 2019? For the Russell 2000, it's risk on again, since biggest movers had little volume or were penny stocks. The expectation is that US rates won't rise and will probably stay neutral. If there's an agreement between US and China, multinationals can start earning greater profits because the currency won't kill them. If we get an inverse yield curve, corporations will still suffer, as it reduces money in innovation, prompts hiring freezes, and reduces M&A activity. Have we seen peak margins that could trigger an earnings recession, rather than an actual economic one?
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Do you see the rally continuing for 2019? For the Russell 2000, it's risk on again, since biggest movers had little volume or were penny stocks. The expectation is that US rates won't rise and will probably stay neutral. If there's an agreement between US and China, multinationals can start earning greater profits because the currency won't kill them. If we get an inverse yield curve, corporations will still suffer, as it reduces money in innovation, prompts hiring freezes, and reduces M&A activity. Have we seen peak margins that could trigger an earnings recession, rather than an actual economic one?
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David Driscoll

President , Liberty Internationa...

Price Price
$0.000
Owned Owned
Unknown

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COMMENT
General Market Comment 

January 17, 2019

More M&As in 2019? Yes, if capital is available. But there's a lot of leverage out there. Plus, banks' profit growth is not as high because they're buying back shares. This market is still priced for perfection.
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More M&As in 2019? Yes, if capital is available. But there's a lot of leverage out there. Plus, banks' profit growth is not as high because they're buying back shares. This market is still priced for perfection.
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David Driscoll

President , Liberty Internationa...

Price Price
$0.000
Owned Owned
Unknown

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DON'T BUY
BIP.UN or TCL.A? Hard to compare infrastructure to packaging. Doesn't have a problem with infrastructure, but the dividend doesn't grow the way he'd like, and the dividend is actually a combination of capital and interest. He owns BAM.A in TFSAs. Instead of TCL.A, he owns CCL Industries because they have greater free cash flow and dividend growth, a safer and less volatile investment over time. He goes for quality companies rather than chasing yield.
INDUSTRIAL PRODUCTS
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BIP.UN or TCL.A? Hard to compare infrastructure to packaging. Doesn't have a problem with infrastructure, but the dividend doesn't grow the way he'd like, and the dividend is actually a combination of capital and interest. He owns BAM.A in TFSAs. Instead of TCL.A, he owns CCL Industries because they have greater free cash flow and dividend growth, a safer and less volatile investment over time. He goes for quality companies rather than chasing yield.
INDUSTRIAL PRODUCTS
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David Driscoll

President , Liberty Internationa...

Price Price
$51.330
Owned Owned
No

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PARTIAL BUY
HEICO CORP(HEI-N) 

January 17, 2019

None of their aerospace parts have caused any accidents since they were formed in 1970. A quality company with quality goods. Q4 sales were up. If they're able to growth profits and dividends, then you can let this company run for you. Caveat: it's expensive, so buying half a position is OK. Plus, if we get another correction, the small caps will be more volatile. Have to make sure you're in quality small cap stocks, and this is one.
transportation equip & components
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None of their aerospace parts have caused any accidents since they were formed in 1970. A quality company with quality goods. Q4 sales were up. If they're able to growth profits and dividends, then you can let this company run for you. Caveat: it's expensive, so buying half a position is OK. Plus, if we get another correction, the small caps will be more volatile. Have to make sure you're in quality small cap stocks, and this is one.
transportation equip & components
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David Driscoll

President , Liberty Internationa...

Price Price
$79.270
Owned Owned
Unknown

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HOLD
Nutrien Ltd.(NTR-T) 

January 17, 2019

Does have seasonality, it depend on when the farmers buy. Fall tends to be weaker, and then picks up in Q4. EBITDA since the merger has been going well. Potash prices have started to rise. But farmers have started using satellite imaging, so they don't need as much fertilizer as they used to. It's in his TFSAs, with consistent dividend growth over time. It's cyclical. Commodity price is holding steady and starting to rise, which will be beneficial. Yield is 3.7%. (Analysts’ price target is $82.52)
agriculture
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Does have seasonality, it depend on when the farmers buy. Fall tends to be weaker, and then picks up in Q4. EBITDA since the merger has been going well. Potash prices have started to rise. But farmers have started using satellite imaging, so they don't need as much fertilizer as they used to. It's in his TFSAs, with consistent dividend growth over time. It's cyclical. Commodity price is holding steady and starting to rise, which will be beneficial. Yield is 3.7%. (Analysts’ price target is $82.52)
agriculture
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David Driscoll

President , Liberty Internationa...

Price Price
$67.690
Owned Owned
Yes

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DON'T BUY
Total SA(TOT-N) 

January 17, 2019

A foreign ADR like this one should be in your cash account, not your RRSP, so you can claim the withholding tax. BP had better performance last quarter. Total's been selling assets, so he's not a fan. The dividend isn't going up fast enough. His resource of choice is water, not oil. Price of oil is in a tug-of-war.
integrated oils
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A foreign ADR like this one should be in your cash account, not your RRSP, so you can claim the withholding tax. BP had better performance last quarter. Total's been selling assets, so he's not a fan. The dividend isn't going up fast enough. His resource of choice is water, not oil. Price of oil is in a tug-of-war.
integrated oils
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David Driscoll

President , Liberty Internationa...

Price Price
$53.760
Owned Owned
No

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HOLD
Chubb Limited(CB-N) 

January 17, 2019

Has a AA credit rating, combined ratio is low at 88% (a profit of 12 cents on every dollar of premium coming in) so they have cash to play with. In their investment portfolio, it's been 100% fixed income so rising rates benefit them. Global warming has hurt them. Conservatively run. Dividend and book value rising nicely over time, and they're global.
insurance
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Has a AA credit rating, combined ratio is low at 88% (a profit of 12 cents on every dollar of premium coming in) so they have cash to play with. In their investment portfolio, it's been 100% fixed income so rising rates benefit them. Global warming has hurt them. Conservatively run. Dividend and book value rising nicely over time, and they're global.
insurance
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David Driscoll

President , Liberty Internationa...

Price Price
$132.860
Owned Owned
Yes

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BUY
Paychex(PAYX-Q) 

January 17, 2019

Revenue growth up 7% last quarter. Interesting acquisition has brought them beyond payroll and into HR. Seeing higher earnings growth because of that. Trading at 20-25x earnings. Dividend's going up. Every time the Fed raises rates, PAYX makes a ton of free money by holding over the weekend before remitting.
computer software/processing
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Revenue growth up 7% last quarter. Interesting acquisition has brought them beyond payroll and into HR. Seeing higher earnings growth because of that. Trading at 20-25x earnings. Dividend's going up. Every time the Fed raises rates, PAYX makes a ton of free money by holding over the weekend before remitting.
computer software/processing
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David Driscoll

President , Liberty Internationa...

Price Price
$68.750
Owned Owned
Yes

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BUY on WEAKNESS
Reckitt Benckiser(RB-LSE) 

January 17, 2019

In portfolios for clients who have European exposure. Abbott is a big competitor. CEO left, so the stock's taken a hit. Were on a growth spurt in last decades, but now it's the law of diminishing returns. In the right areas, and will do well as long as they stay focused. An opportunity to pick away at it.
misc consumer products
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In portfolios for clients who have European exposure. Abbott is a big competitor. CEO left, so the stock's taken a hit. Were on a growth spurt in last decades, but now it's the law of diminishing returns. In the right areas, and will do well as long as they stay focused. An opportunity to pick away at it.
misc consumer products
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David Driscoll

President , Liberty Internationa...

Price Price
$0.000
Owned Owned
Yes

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PAST TOP PICK
(A Top Pick Dec 28/17, Up 7%) Growing economy, so rails will do well. Plus, pipelines are shut out. Great thing is they own 25% of the container port in Prince Rupert, so they can get oil to China faster. Dividend growth plus splits is how you grow your retirement income over time, without having to eat into capital. A quality company.
Transportation
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(A Top Pick Dec 28/17, Up 7%) Growing economy, so rails will do well. Plus, pipelines are shut out. Great thing is they own 25% of the container port in Prince Rupert, so they can get oil to China faster. Dividend growth plus splits is how you grow your retirement income over time, without having to eat into capital. A quality company.
Transportation
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David Driscoll

President , Liberty Internationa...

Price Price
$109.000
Owned Owned
Yes

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PAST TOP PICK
Cognex Corporation(CGNX-Q) 

January 17, 2019

(A Top Pick Dec 28/17, Down 32%) Doubled his money and sold half, that's his rule. Price is at a point where he's getting interested again. Apple is its biggest customer, and Amazon is a big client. They produce the "eyes" to the barcode scanning robots. A growing business, dividend increased about 10%. Very cyclical.
computer parts mnfctr
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(A Top Pick Dec 28/17, Down 32%) Doubled his money and sold half, that's his rule. Price is at a point where he's getting interested again. Apple is its biggest customer, and Amazon is a big client. They produce the "eyes" to the barcode scanning robots. A growing business, dividend increased about 10%. Very cyclical.
computer parts mnfctr
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David Driscoll

President , Liberty Internationa...

Price Price
$42.000
Owned Owned
Yes

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PAST TOP PICK
Unilever NV(UN-N) 

January 17, 2019

(A Top Pick Dec 28/17, Down 3%) Compared to P&G, they have their feet on the ground better because of recent acquisitions. Open to increasing brand scope. 40% of revenues are in EM, and that's where growth will come from.
food processing
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(A Top Pick Dec 28/17, Down 3%) Compared to P&G, they have their feet on the ground better because of recent acquisitions. Open to increasing brand scope. 40% of revenues are in EM, and that's where growth will come from.
food processing
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David Driscoll

President , Liberty Internationa...

Price Price
$52.950
Owned Owned
Yes

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COMMENT
General Market Comment 

January 17, 2019

Cash position for 2019. Has 20% cash right now, based on the fixed income part of a portfolio. Cash is deemed to be a synthetic short. Pays off when you get a quarter like Q4 of 2018.

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Cash position for 2019. Has 20% cash right now, based on the fixed income part of a portfolio. Cash is deemed to be a synthetic short. Pays off when you get a quarter like Q4 of 2018.

Unknown
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David Driscoll

President , Liberty Internationa...

Price Price
$0.000
Owned Owned
Unknown

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HOLD
Rollins Inc(ROL-N) 

January 17, 2019

Revenues were up 8% from last quarter. Free cash flows are huge. Net income up 30%. It's all about the critters from floods and hurricanes. Bed bugs is the #1 problem in the US. Problem they've had is their workforce has been immigrants, and the door has been slammed. Free cash flow is growing, and dividend's growing at a 15% clip. Quasi-recession proof.
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Revenues were up 8% from last quarter. Free cash flows are huge. Net income up 30%. It's all about the critters from floods and hurricanes. Bed bugs is the #1 problem in the US. Problem they've had is their workforce has been immigrants, and the door has been slammed. Free cash flow is growing, and dividend's growing at a 15% clip. Quasi-recession proof.
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David Driscoll

President , Liberty Internationa...

Price Price
$37.900
Owned Owned
Yes

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