Opinions by Paul Gardner, CFA | StockChase
1292
Paul Gardner, CFA

Partner and Portfolio Manager

ON STOCKCHASE SINCE Dec 2004

Avenue Investment Management
47 Colborne StreetSuite 300Toronto, ONM5E 1P8
T: 416.482.2004 F: 416.482.0007 pgardner@avenueinvestment.com
http://www.avenueinvestment.com/

1292
Paul Gardner, CFA

Partner and Portfolio Manager

ON STOCKCHASE SINCE Dec 2004

Avenue Investment Management
47 Colborne StreetSuite 300Toronto, ONM5E 1P8
T: 416.482.2004 F: 416.482.0007 pgardner@avenueinvestment.com
http://www.avenueinvestment.com/


Opinions by Paul Gardner, CFA


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COMMENT
General Market Comment 

November 29, 2017

Canadian Banks? It’s all about a compelling valuation. Banks generally do an ROE at about 14%-16%, and are only valued at 12X earnings. In this environment, where we are seeing a little bit of rate increases, NIM is creeping up which is good for them. Also, a lot of are in the US. He is positive on the banks. Next year should be a breakout year for them.

Canadian Banks? It’s all about a compelling valuation. Banks generally do an ROE at about 14%-16%, and are only valued at 12X earnings. In this environment, where we are seeing a little bit of rate increases, NIM is creeping up which is good for them. Also, a lot of are in the US. He is positive on the banks. Next year should be a breakout year for them.

Unknown
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$0.020
Owned Owned
Unknown

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TOP PICK
Apple(AAPL-Q) 

November 29, 2017

This is all about the iPhone. The reviews are in, and the iPhone 10 is gargantuan. There is so much potential from both the 8 and the 10, but on an earnings perspective, the PE is around 13X earnings when you X-out the cash. Dividend yield of 1.5%. (Analysts’ price target is $193.)

electrical/electronic

This is all about the iPhone. The reviews are in, and the iPhone 10 is gargantuan. There is so much potential from both the 8 and the 10, but on an earnings perspective, the PE is around 13X earnings when you X-out the cash. Dividend yield of 1.5%. (Analysts’ price target is $193.)

electrical/electronic
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$169.480
Owned Owned
Yes

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PAST TOP PICK
AutoCanada Inc.(ACQ-T) 

November 29, 2017

(A Top Pick March 28/17. Up 11%.) Started liking this at around $20. Trading at about 12X earnings. Last quarter they beat their numbers. They’ve put a lot into cost containment. Also, the Alberta economy has come back. Car sales have also been better. He expects it to track into the high $20 over the next year.

specialty stores

(A Top Pick March 28/17. Up 11%.) Started liking this at around $20. Trading at about 12X earnings. Last quarter they beat their numbers. They’ve put a lot into cost containment. Also, the Alberta economy has come back. Car sales have also been better. He expects it to track into the high $20 over the next year.

specialty stores
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$23.120
Owned Owned
Yes

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WAIT

Has been hit because of their overexposure to Alberta. Announced they are going to sell a lot of their Alberta properties, and get more focused in the US. This is transforming the company into being better. There is still a headwind because of their office exposure in Alberta. He isn’t overly negative, but wouldn’t step in yet.

property mngmnt/investment

Has been hit because of their overexposure to Alberta. Announced they are going to sell a lot of their Alberta properties, and get more focused in the US. This is transforming the company into being better. There is still a headwind because of their office exposure in Alberta. He isn’t overly negative, but wouldn’t step in yet.

property mngmnt/investment
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$14.020
Owned Owned
Unknown

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PAST TOP PICK
BCE Inc.(BCE-T) 

November 29, 2017

(A Top Pick March 28/17. Up 8%.) Has underperformed relative to the sector, but still likes it.

telephone utilities

(A Top Pick March 28/17. Up 8%.) Has underperformed relative to the sector, but still likes it.

telephone utilities
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$61.690
Owned Owned
Yes

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TOP PICK
BCE Inc.(BCE-T) 

November 29, 2017

He is more bullish on this because the valuation relative to the sector is cheap. Over the next 2 to-3 years, this company is really going to outperform, and it’s all about the fibre to the home. They are going to hook up about 9 million homes, and are about a 3rd to a half through. This has a tremendous amount of free cash flow yielding about 6%. Dividend yield of 4.6%. (Analysts’ price target is $62.)

telephone utilities

He is more bullish on this because the valuation relative to the sector is cheap. Over the next 2 to-3 years, this company is really going to outperform, and it’s all about the fibre to the home. They are going to hook up about 9 million homes, and are about a 3rd to a half through. This has a tremendous amount of free cash flow yielding about 6%. Dividend yield of 4.6%. (Analysts’ price target is $62.)

telephone utilities
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$61.690
Owned Owned
Yes

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PAST TOP PICK
Baytex Energy Corp(BTE-T) 

November 29, 2017

(A Top Pick March 28/17. Up 8%.) 6.625% Bonds maturing in 2022. The biggest challenge is that they have to lower their debt balance.

oil/gas

(A Top Pick March 28/17. Up 8%.) 6.625% Bonds maturing in 2022. The biggest challenge is that they have to lower their debt balance.

oil/gas
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$4.060
Owned Owned
Yes

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COMMENT

You should look at this as a proxy for the high-yield market. There was a big selloff over the last 6 weeks, because high yields have rallied so hard and so fast, there was a revaluation.

E.T.F.'s

You should look at this as a proxy for the high-yield market. There was a big selloff over the last 6 weeks, because high yields have rallied so hard and so fast, there was a revaluation.

E.T.F.'s
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$19.150
Owned Owned
Unknown

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COMMENT
Canadian Natural Rsrcs(CNQ-T) 

November 29, 2017

What's a good blue-chip, dividend paying energy stock for a long term hold? He really, really likes this one, the best in class. Assuming oil ranges from $40-$60, this company is going to gush about $2.5 billion in free cash flow in 2018. They are going to pay down debt aggressively. They’ll also be increasing the dividend.

oil/gas

What's a good blue-chip, dividend paying energy stock for a long term hold? He really, really likes this one, the best in class. Assuming oil ranges from $40-$60, this company is going to gush about $2.5 billion in free cash flow in 2018. They are going to pay down debt aggressively. They’ll also be increasing the dividend.

oil/gas
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$42.790
Owned Owned
Yes

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COMMENT

This is the real estate arm of Empire, and the major tenant is Sobey’s, which is struggling. About 30% of their rental is from Sobey’s. A strong, defensive style REIT, because it is generally anchored by non-cyclical retail outlets. You are going to clip your 6.5%, but doesn’t think you’re going to make anything more than that. This is not a growth story. He owns their debt.

property mngmnt/investment

This is the real estate arm of Empire, and the major tenant is Sobey’s, which is struggling. About 30% of their rental is from Sobey’s. A strong, defensive style REIT, because it is generally anchored by non-cyclical retail outlets. You are going to clip your 6.5%, but doesn’t think you’re going to make anything more than that. This is not a growth story. He owns their debt.

property mngmnt/investment
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$13.760
Owned Owned
Yes

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COMMENT
Enbridge(ENB-T) 

November 29, 2017

Inter-Pipe (IPL-T) or Enbridge (ENB-T)? He likes both. Just bought this at $43. It has slightly more opportunity as they got hit so hard. Both are toll booth investments, but the street is typing this as an oil company. The yield is excellent. If he were being pushed, he would say he likes this one better.

oil/gas pipelines

Inter-Pipe (IPL-T) or Enbridge (ENB-T)? He likes both. Just bought this at $43. It has slightly more opportunity as they got hit so hard. Both are toll booth investments, but the street is typing this as an oil company. The yield is excellent. If he were being pushed, he would say he likes this one better.

oil/gas pipelines
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$45.750
Owned Owned
Yes

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COMMENT

This was a focused railroad hotel. They did a new contract with the rails, which allows them to resell 20% of unused accommodation to the general public. They focus on suburbia USA. The railway business is less important now, being only 30% versus the 60% it used to be. The stock has been under pressure, and he wouldn’t be surprised to see better numbers coming out. It is interesting and he is looking at it.

investment companies/funds

This was a focused railroad hotel. They did a new contract with the rails, which allows them to resell 20% of unused accommodation to the general public. They focus on suburbia USA. The railway business is less important now, being only 30% versus the 60% it used to be. The stock has been under pressure, and he wouldn’t be surprised to see better numbers coming out. It is interesting and he is looking at it.

investment companies/funds
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$9.150
Owned Owned
No

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COMMENT

Announced they were going to make close to $1 billion in sales out of the US, and reinvest in multi-resident businesses. This is a strategy that is getting a little tired. His biggest issue is that they are so diversified, such as office, residential, redevelopment, Canada, US, it is too much for an analyst. Thinks they’ve been hurt by this.

property mngmnt/investment

Announced they were going to make close to $1 billion in sales out of the US, and reinvest in multi-resident businesses. This is a strategy that is getting a little tired. His biggest issue is that they are so diversified, such as office, residential, redevelopment, Canada, US, it is too much for an analyst. Thinks they’ve been hurt by this.

property mngmnt/investment
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$20.980
Owned Owned
No

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COMMENT
Inter Pipeline(IPL-T) 

November 29, 2017

Trades on an EV to EBITDA at about 11X. Historically it should trade at around 13X. Thinks it is cheap. This is the pipeline from the oil sands. As all the producers in the oil sands increase their output, they are going to have to put it in some pipe. With a 4% yield and a tremendous cash flow, they have the ability to grow the dividend. It has the potential to go higher.

oil pipelines

Trades on an EV to EBITDA at about 11X. Historically it should trade at around 13X. Thinks it is cheap. This is the pipeline from the oil sands. As all the producers in the oil sands increase their output, they are going to have to put it in some pipe. With a 4% yield and a tremendous cash flow, they have the ability to grow the dividend. It has the potential to go higher.

oil pipelines
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$26.910
Owned Owned
Yes

Must be logged in to use chart
COMMENT
Just Energy Group(JE-T) 

November 29, 2017

Double down? Hasn’t looked at this for a long time, so can’t give a good opinion. They are trying to diversify in Japan, but who knows if they have the expertise in that. However, he would not double down.

Utilities

Double down? Hasn’t looked at this for a long time, so can’t give a good opinion. They are trying to diversify in Japan, but who knows if they have the expertise in that. However, he would not double down.

Utilities
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$5.390
Owned Owned
No

Must be logged in to use chart
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