Opinions by David Driscoll | StockChase
1895
David Driscoll

President & CEO

ON STOCKCHASE SINCE Oct 2000

Liberty International Investment Management Inc

1895
David Driscoll

President & CEO

ON STOCKCHASE SINCE Oct 2000

Liberty International Investment Management Inc


Opinions by David Driscoll


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General Market Comment 

January 11, 2018

Market. S&P 500 is trading around 24X. Historically it is usually 16X. We are getting overvalued. Now we have tax cuts, consumer spending, expectation for GDP growth, hence the expectation that if earnings are growing at a faster rate, then the stock market should grow faster. Peaks have occurred in 1929 before the market crash, up and down until 1938, and then the tech bubble in 1997 and 1999 was a melt up before everything came crashing back to earth. In this phase, we could get a melt up. If it happens, be prepared to manage your portfolio appropriately, so you will be able to counter if we get any kind of a selloff after.

You should pay attention to a stock's beta. For example, you have some high-flying tech stocks which are trading at high betas, which is simply the price volatility relative to the underlying index. If the market index is 1, and the stock is trading at 1.75, that means for every $1 the market goes up or down, the price of the stock is going to go up or down by 1.75. If the stock market were to fall 40% like it did in 2008, then the stock's share price is going to go down 65%-75%.

Market. S&P 500 is trading around 24X. Historically it is usually 16X. We are getting overvalued. Now we have tax cuts, consumer spending, expectation for GDP growth, hence the expectation that if earnings are growing at a faster rate, then the stock market should grow faster. Peaks have occurred in 1929 before the market crash, up and down until 1938, and then the tech bubble in 1997 and 1999 was a melt up before everything came crashing back to earth. In this phase, we could get a melt up. If it happens, be prepared to manage your portfolio appropriately, so you will be able to counter if we get any kind of a selloff after.

You should pay attention to a stock's beta. For example, you have some high-flying tech stocks which are trading at high betas, which is simply the price volatility relative to the underlying index. If the market index is 1, and the stock is trading at 1.75, that means for every $1 the market goes up or down, the price of the stock is going to go up or down by 1.75. If the stock market were to fall 40% like it did in 2008, then the stock's share price is going to go down 65%-75%.

Unknown
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$0.020
Owned Owned
_N/A

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COMMENT
Air Canada(AC-T) 

January 11, 2018

It’s interesting that this stock is falling while US airlines are rising. His guess is that this airline is impacted by rising oil prices. Their largest cost, after labour, is fuel. He would never own the stock, because they have such high capital expenditures that they never generate real growing free cash flow. If he owned this, he would have entry points and exit points. If one of your targets gets hit, you can sell half, or start to find the next the point based on the high multiples in the category.

Transportation

It’s interesting that this stock is falling while US airlines are rising. His guess is that this airline is impacted by rising oil prices. Their largest cost, after labour, is fuel. He would never own the stock, because they have such high capital expenditures that they never generate real growing free cash flow. If he owned this, he would have entry points and exit points. If one of your targets gets hit, you can sell half, or start to find the next the point based on the high multiples in the category.

Transportation
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$23.790
Owned Owned
No

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COMMENT
Atrion Corp(ATRI-Q) 

January 11, 2018

Small caps tend to be less liquid and therefore may have higher betas, although this one is low at 6.1, because it doesn't trade a lot. It makes all kinds of medical devices that none of the big guys want to manufacture. A good entry point would be around $50. This is one you want to hold for the long run.

Healthcare

Small caps tend to be less liquid and therefore may have higher betas, although this one is low at 6.1, because it doesn't trade a lot. It makes all kinds of medical devices that none of the big guys want to manufacture. A good entry point would be around $50. This is one you want to hold for the long run.

Healthcare
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$593.450
Owned Owned
Yes

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COMMENT
BCE Inc.(BCE-T) 

January 11, 2018

Last year, the 12-month price was up 5.8% compared to Rogers (RCI.B-T) at 26% and Cogeco (CGO-T) and 27%. The dividend yield is at 5%. The acquisitions they have been making doesn't change the landscape at all. This is fine for the widows and orphans, but don't be suckered in to buying a high yield stocks, because if you are not getting the dividend growth with it, you are not getting a whole lot of capital appreciation.

telephone utilities

Last year, the 12-month price was up 5.8% compared to Rogers (RCI.B-T) at 26% and Cogeco (CGO-T) and 27%. The dividend yield is at 5%. The acquisitions they have been making doesn't change the landscape at all. This is fine for the widows and orphans, but don't be suckered in to buying a high yield stocks, because if you are not getting the dividend growth with it, you are not getting a whole lot of capital appreciation.

telephone utilities
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$58.440
Owned Owned
Unknown

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PARTIAL BUY

5G is coming to a billion people in China, and they only have half a billion signed up so far. This is interesting because it is a domestic Chinese stock that pretty much has a built-in market without competition. This is more of a blue-chip yield play, as opposed to expectations of a lot of growth, but they may start to see better times ahead. This will put more smart phones in the hands of rural Chinese. Go slowly into this, because you never know what could happen in the Chinese stock market.

Telecommunications

5G is coming to a billion people in China, and they only have half a billion signed up so far. This is interesting because it is a domestic Chinese stock that pretty much has a built-in market without competition. This is more of a blue-chip yield play, as opposed to expectations of a lot of growth, but they may start to see better times ahead. This will put more smart phones in the hands of rural Chinese. Go slowly into this, because you never know what could happen in the Chinese stock market.

Telecommunications
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$49.870
Owned Owned
No

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BUY
Clorox Company(CLX-N) 

January 11, 2018

A very good company. It's one of the consumer product stocks that has actually had constant growth. They generate free cash flow. Dividend growth has been above average.

misc consumer products

A very good company. It's one of the consumer product stocks that has actually had constant growth. They generate free cash flow. Dividend growth has been above average.

misc consumer products
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$141.990
Owned Owned
No

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PAST TOP PICK
Danaher Corp.(DHR-N) 

January 11, 2018

(A Top Pick March 13/17. Up 13%.) This is in 5 businesses, life sciences, diagnostics, water quality, product idea and dental. These are all industries that have burgeoning growth going forward. Danaher makes acquisitions of companies in those industries, and then turns them around. The dividend has been growing at roughly a 12%-15% clip, so a 13% return on the stock price is no surprise.

machinery

(A Top Pick March 13/17. Up 13%.) This is in 5 businesses, life sciences, diagnostics, water quality, product idea and dental. These are all industries that have burgeoning growth going forward. Danaher makes acquisitions of companies in those industries, and then turns them around. The dividend has been growing at roughly a 12%-15% clip, so a 13% return on the stock price is no surprise.

machinery
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$98.590
Owned Owned
Yes

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PAST TOP PICK
Dassault Systemes(DSY-FP) 

January 11, 2018

(A Top Pick March 13/17. Up 20%.) Provides software where you can design and test how you are going to do certain projects at the lowest cost and how you are going to accomplish it. They have been growing at 20% a year, and the dividend has been growing roughly at that rate.

(A Top Pick March 13/17. Up 20%.) Provides software where you can design and test how you are going to do certain projects at the lowest cost and how you are going to accomplish it. They have been growing at 20% a year, and the dividend has been growing roughly at that rate.

0
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$0.000
Owned Owned
Yes

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COMMENT
Fortis Inc.(FTS-T) 

January 11, 2018

The problem he has with utilities is that they are making acquisitions for growth, not organically. That is the 1st of a red flag. Interest rates are rising. This company's dividends have been going up roughly 7%. The company has been moving into the US so there are some currency issues. If you go with this, don’t make it a large holding.

electrical utilities

The problem he has with utilities is that they are making acquisitions for growth, not organically. That is the 1st of a red flag. Interest rates are rising. This company's dividends have been going up roughly 7%. The company has been moving into the US so there are some currency issues. If you go with this, don’t make it a large holding.

electrical utilities
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$43.850
Owned Owned
Unknown

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COMMENT
ICICI Bank Ltd.(IBN-N) 

January 11, 2018

There are 2 really good banks in India, this and HDFC. India has a lot of government fiscal policy change right now, and GST has been added so they can get their revenues up and be able to start to spend on infrastructure. Unlike this bank, HDFC Bank is more of a development bank, and have been able to grow their dividends at a much faster rate. He chose HDFC for his holdings for the future.

banks

There are 2 really good banks in India, this and HDFC. India has a lot of government fiscal policy change right now, and GST has been added so they can get their revenues up and be able to start to spend on infrastructure. Unlike this bank, HDFC Bank is more of a development bank, and have been able to grow their dividends at a much faster rate. He chose HDFC for his holdings for the future.

banks
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$9.760
Owned Owned
No

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TOP PICK
Jardine Matheson(JM-SP) 

January 11, 2018

There are 2 big conglomerates in south east Asia, and this is an easy way for Canadian investors to have access to the south-east market with a big conglomerate. The stock has done nothing for the last 5 years, because of the rise in the US$. They report their numbers in US$, but currencies in Indonesia, China, etc. have been falling, so they’ve been hurt. This has a clean balance sheet and they can make acquisitions. 10-year dividend growth rate has been 15%. Dividend yield of 2.5%. (Analysts' price target is $67.)

There are 2 big conglomerates in south east Asia, and this is an easy way for Canadian investors to have access to the south-east market with a big conglomerate. The stock has done nothing for the last 5 years, because of the rise in the US$. They report their numbers in US$, but currencies in Indonesia, China, etc. have been falling, so they’ve been hurt. This has a clean balance sheet and they can make acquisitions. 10-year dividend growth rate has been 15%. Dividend yield of 2.5%. (Analysts' price target is $67.)

0
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$0.010
Owned Owned
Yes

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TOP PICK
Lindsay Corp.(LNN-N) 

January 11, 2018

His resource of choice is water and wastewater. This company is into irrigation equipment. They've been able to advance, through technology, to have satellite shots of irrigation equipment so it can be controlled anywhere on the farm. 60% of sales are in the US and 40% is international, particularly in Brazil. Dividend yield of 1.4%. (Analysts price target is $83.)

machinery

His resource of choice is water and wastewater. This company is into irrigation equipment. They've been able to advance, through technology, to have satellite shots of irrigation equipment so it can be controlled anywhere on the farm. 60% of sales are in the US and 40% is international, particularly in Brazil. Dividend yield of 1.4%. (Analysts price target is $83.)

machinery
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$92.130
Owned Owned
Yes

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COMMENT
Lloyds TSB Group PLC(LYG-N) 

January 11, 2018

This was up 10% last year, which wasn't as great as a lot of the European banks. The biggest problem in Europe is that they have ultra low rates and are just starting to think about getting rid quantitative easing. Until interest rates and inflation start to rise in Europe, you are going to get stickiness out of European banks and their growth rates. This bank just started to initiate a dividend again, which they haven't paid for 6 years.

banks

This was up 10% last year, which wasn't as great as a lot of the European banks. The biggest problem in Europe is that they have ultra low rates and are just starting to think about getting rid quantitative easing. Until interest rates and inflation start to rise in Europe, you are going to get stickiness out of European banks and their growth rates. This bank just started to initiate a dividend again, which they haven't paid for 6 years.

banks
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$3.870
Owned Owned
No

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COMMENT
Morgan Stanley(MS-N) 

January 11, 2018

If you look at all the US banks' total returns, they are almost identical. The reason is because of ETF's. It’s pretty much a 26%-27% total return over the last 12 months for almost all the big money centred banks. Interest rates are rising, so it’s a good place to be. For access to American banking, he owns Toronto Dominion (TD-T) instead. On the dividend per share being paid out by US banks, they are just getting started. This bank would be deemed more as a money centred bank. A little slower growth than some of the others, because they have more of a global positioning with greater capital markets exposure.

investment companies/funds

If you look at all the US banks' total returns, they are almost identical. The reason is because of ETF's. It’s pretty much a 26%-27% total return over the last 12 months for almost all the big money centred banks. Interest rates are rising, so it’s a good place to be. For access to American banking, he owns Toronto Dominion (TD-T) instead. On the dividend per share being paid out by US banks, they are just getting started. This bank would be deemed more as a money centred bank. A little slower growth than some of the others, because they have more of a global positioning with greater capital markets exposure.

investment companies/funds
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$54.200
Owned Owned
No

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HOLD
Nutrien Ltd.(NTR-T) 

January 11, 2018

This is the merger of Agrium and Potash. If the population is continually growing, someone has to feed them. The industry has been hurt recently, because China, Ukraine and Russia are cutting prices just to get rid of supply. When that supply disappears and demand catches up, they then have pricing power. In the meantime, it is just a matter of sitting back. $50 would be a good entry point. Earnings are going to be choppy over the next little while.

agriculture

This is the merger of Agrium and Potash. If the population is continually growing, someone has to feed them. The industry has been hurt recently, because China, Ukraine and Russia are cutting prices just to get rid of supply. When that supply disappears and demand catches up, they then have pricing power. In the meantime, it is just a matter of sitting back. $50 would be a good entry point. Earnings are going to be choppy over the next little while.

agriculture
David Driscoll

President & CEO, Liberty Internationa...

PricePrice
$66.630
Owned Owned
Unknown

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