CEO & Head of Research at 5i Research Inc.
Member since: Feb '03 · 2340 Opinions
One of the worst things for an investor or business owner is uncertainty. The latter has no idea what will happen this week, no idea over input costs, whether they should hire more employees now. The former are paralyzed and do nothing. Business will grind to a halt, which is not good for the stock market. He doesn't see an ending soon. There's a small window--inflation takes a little time to kick in, like 3-4 months, but impact on demand is immediate. People won't spend if they expect a recession. He's waiting for the VIX to spike to 40-50 before buying. What will Q1 earnings be and the full-year outlook? Business isn't bad for companies, but they are uncertain, which will dampen their outlooks. Don't panic or react to headlines. Quality companies will get through this. Most dividends will be okay. Buy a little gold, which is good in a crisis.
Is -27% this year, but above its IPO. Have grown revenue 50% in the past 3 quarters. The last quarter was amazing. Hold $2 billion cash. However, they are closely tied to search, and AI will take a lot of that business away. Also, AI searches are using their answers. Also, trades at a high 52x PE. This will be okay, but buy lower.
It fell below $20 on tariff fears. Some products may be exempt from tariffs if covered by Medicare. They've grown by acquisition, so have some exposure to the US. This is not bad at this price now to hide in. Their business is generally stable and shares are relatively cheap. Management owns lots of shares and have grown the business well. SIS is a better play than a software or oil company this size, because their business is stable. It helps they have business outside US, though input costs this year will be a worry.
He likes the WCP-Veren deal. Both were already decent companies, but together will enjoy synergy from cost savings. It will become the 4th-largest light oil producer in Canada. Management knows what it's doing, valuation good. Bigger companies here tend to enjoy a multiple increase. Veren shareholder will receive the WCP dividend, a big increase for them. The combined company will do pretty well.
He likes the WCP-Veren deal. Both were already decent companies, but together will enjoy synergy from cost savings. It will become the 4th-largest light oil producer in Canada. Management knows what it's doing, valuation good. Bigger companies here tend to enjoy a multiple increase. Veren shareholder will receive the WCP dividend, a big increase for them. The combined company will do pretty well.
Non-prime lending is a tough business. Canada has capped interest rates on how much you can charge. They have to charge a lot to make any money. PRL has grown a lot since going public a few years ago. They raised their dividend many times. Shares climbed to $40, then sank in recent months, though their business has not changed. Why? Fundamentals are sound. Perhaps there are fears of loan defaults. But during recessions, they get more clients, people desperate for loans. Caveat: shares go down with the market in a recession. Dividend and growth are okay. The valuation is down to a low and is attractive.
See comments on Propel Holdings, too. This stock has done well over time, but investors have been selling this recently. The new CEO has 20 years' experience in retail banking, very good. The valuation is cheaper now, while the dividend has been there a long time and continue to raise it. Good long term, but one day he thinks some company will buy it out.
The problem is this trades on sentiment, not fundamentals. Of course, the issue now is Musk. Probably, enough people not buying their cars will impact their sales. Also, a Chinese competitor is outselling Tesla. The valuation remains a premium, but would you own such a company at this level with slower sales and this sentiment? He's rather see Tesla at $200 then take a look at it, and even then would buy a tranche.