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Stock Opinions by John O'Connell, CFA

COMMENT
Market risks are elevated and economic growth will slow down this year. U.S. GDP forecasts are around 2% for first quarter. Central banks globally will be more aggressive in moderating inflation but they can't control the supply side. 10 year bonds have gone up substantially and are at 2.75% today. We are coming into earnings season so we'll see how companies are dealing with inflation. S&P is 19X earnings so the margin of error is somewhat low. Some of earnings increases is a result of companies passing on inflation costs with higher prices so look for companies with strong pricing power, not ones that are price takers, or with low pricing power.
Unknown
COMMENT
Caller had put all their savings into Shopify. His first advice is to never invest in just one stock so this is a worry. Shopify is a high growth and high valuation stock. If you extrapolate revenue growth 5 years in advance this stock would probably trade at much lower prices today. They announced today a move to entrench the founder which is disappointing. Also they announced today a 10 for 1 stock split but that doesn't change the valuation.
0
Unspecified
It is well run but is competing against online shopping. It gives exposure to only the Canadian shopper and you should consider multinational companies with consumers better off than Canadian consumers who carry a lot of debt, the most in the world.
specialty stores
Unspecified
Interchangeable networks with Visa, MasterCard and American Express which will all continue to do well. PayPal is not a competitive threat. Visa has struggled a bit because of tourism business decline but this should improve slowly.
other services
VAGUE
It has a 4.4% yield and trades at 10 or11 X earnings. It will do a 2 for 1 split but it doesn't matter whether you buy before or after the split since the yield and earnings stay the same. It is as good as any other Canadian bank. He prefers the U.S. banks since the American consumer is in much better shape financially.
banks
Unspecified
It is very well run and is one of the largest asset managers in the world. Has done everything right and is expanding internationally which creates many opportunities. Includes infrastructure, renewables and private credit funds in the U.S. The yield is relatively low so it might be a bit volatile in case of market turmoil. There is a possibility of spinning off the asset management business. Valuation is reasonable
management / diversified
COMMENT
It is a good company and has done well navigating through the oil and gas turmoil. It is buying back stock. The oil and gas business is tricky. Consider Tourmaline (TOU) as a more diversified company and its sister company Topaz. He also suggested Rubilex (RDY) as a very good micro cap. It is not being followed, trades at 2X cash flow and has very good drilling/exploration potential in a project.
oil / gas
DON'T BUY
CN and CP are both well run but a slowing economy creates a challenge for the transportation companies. Grain shipments are positive but the auto part faces headwinds. It hasn't increased the tonnage of shipments in the past several years but has been raising prices so there is a limit.
Transportation
PAST TOP PICK
(A Top Pick Jun 10/21, Up 29%) It trades at a fair value and is a great long term buy. It makes highly sensitive measurement devices for research development in several fields. Could be some headwinds because of the Covid testing equipment part. Has high recurring revenue, is acquisitive and a compounder of capital. Growing quickly in China and also around the world.
electrical / electronic
PAST TOP PICK
(A Top Pick Jun 10/21, Up 19.66%) Although down, it is good value. Makes software for testing chips and there are many chip designing/making companies. It is a long term compounder of capital and the runway is compelling.
Technology
PAST TOP PICK
(A Top Pick Jun 10/21, Down 8.66%) It continues to do everything right and has raised wages aggressively. Is one of the most reliable suppliers. It has outstanding value and is still a good long term investment. The two dollar price increase for Prime should help the stock.
specialty stores
Unspecified
It is well run with very strong cash flows. Also aggressively buying back stock. Very successful in acquiring, integrating and growing its business. Growth profile is a little slower but management is disciplined and doing the right thing. Trading at a good valuation with good price protection. Buy 12, Hold 3, Sell 0
food stores
Unspecified
Has owned for many years. It is the best play in managed health care and helps payers and payees be more efficient and lower health care costs. Acquires and tucks in acquisitions. Highly innovative and very well managed. Maybe trading a bit on the rich side.
medical services
COMMENT
The question was on U.S. banks.. He owns JP Morgan and Bank of America both down from their highs. Also PNC Financial which has a strong balance sheet. Bank stocks have not been trading well. Also some slowdown in investment banking revenue. They will benefit from Block Chain technology over the long term and have been investing a lot of money in this area. The U.S. citizen is in strong financial shape and banks should see an uptick in consumer installment credit.
Unknown
DON'T BUY
Be cautious - there is lots of debt and it is a cyclical business. All car companies will need to invest a lot of money in EV vehicles. It is a slow growing business which is selling expensive items at low margins. Could buy if price drops to somewhere in the teens.
Automotive
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