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Stock Opinions by Adam Thomas

N/A

Market. WHY-X put out a news release that suggested someone would buy their deposit in BC. The company surged and was halted, then the deal fell apart. You have to be careful about this. He cannot believe the kinds of things that go on in this market.

Unknown
DON'T BUY

When the economy is strong, cyclical sectors tend to outperform. He thinks we are very late in the economic cycle. It could end any time now. You want to be underweight cyclical late in the cycle. When the market is down and the bad news is priced in, then that is when to overweight these. Don’t add to industrials right now.

E.T.F.'s
DON'T BUY

It is a great way to play the big techs, but now is not a great time to get in. The covered calls mean that if markets go up a lot you may not participate properly. He likes the ETF, but tech stocks are not a great place to be right now.

E.T.F.'s
DON'T BUY

We are never going back to coal. Everyone has moved off it, despite what Mr. Trump happens to say about it. If it gets back down to the $39 area he might be tempted to play it, however.

Utilities
N/A

Educational Segment. Demographics. You have two natural drivers of growth: Growth from population growth and growth from productivity growth. From the sum of the two we get about 1.3% growth in the world. We have a growth problem, despite all the money being spent in the world. We are in a low growth world. The vast majority of the growth in the world is from China, India and Africa. But China is near finished growing. AFK-N and INDA-N are ETFs he likes. Buy on pullbacks.

Unknown
COMMENT

It is priced in US$ so you have currency exposure. Last year there was a lot of price decline due to currency fluctuation. This ETF is not risk free. If all the holdings in the ETF go down a lot there is a downside risk. Liquidity is not an issue for this ETF.

E.T.F.'s
DON'T BUY

Listed in Canada but operations are in the far east. Is cautious because of high debt and accounting is weird. If you are betting gold will go a lot higher it is a pretty decent bet but if not it can decline a lot.

precious metals
WATCH

Potential take out candidate. It would be Metro, most likely. A very well run company. With shippers taken out it will be the only guy left. The take out premium has already been priced in. He would wait. Doesn’t like the risk / reward ratio. It would make a lot of sense if PJC took out someone else.

department stores
TOP PICK
Being acquired by Marathon (MRO-N). He is buying it for the sum of the parts of the valuation. Basically what you are getting with the Marathon take out is cash and about 33% of stock. You also get a junior international exploreco, Western Zagros in Kurdistan, where there are significant light oil deposits. Market is not fully valuing this company.
oil / gas
TOP PICK
A Norwegian company. Largest tanker company in the world. This is especially important to the yield hungry investor who has been playing the royalty trusts. Has about a 15% yield. Only trades at about 4X PE. Tanker stocks cash flow a significant amount of money. Try to pick it up closer to the $42 range.
Transportation
TOP PICK
Undervalued story. Junior gas focused company with 70% gas in Alberta. Probably one of the best management teams in the patch. Has come down significantly from its highs. You now get it below NAV. Clean balance sheet. Could be a takeout candidate. Buy a little bit now and if Alberta does not implement the royalty review, buy more.
oil / gas
BUY
As dropped down way below its intrinsic value and could be a takeout. Low multiple at 2.5X cash flow. Expect it will be gone in a next 5 to 6 months at a nice premium.
oil / gas
DON'T BUY
Did quite poorly over the last couple of years. Have assets in Wilcox County, Texas and it has been tough slugging. Spent a lot of time/capital drilling big, expensive wells. Difficult to get to and difficult to drill. Asset base in Canada is in southeastern Alberta, which has been in decline.
oil / gas
DON'T BUY
Did quite poorly over the last couple of years. Have assets in Wilcox County, Texas and it has been tough slugging. Spent a lot of time/capital drilling big, expensive wells. Difficult to get to and difficult to drill. Asset base in Canada is in southeastern Alberta, which has been in decline.
oil / gas
SELL
Have been in Colombia for quite some time and have had pretty significant discoveries in the Llanos Basin. Stock has been running lately because they are drilling the Corcel 2 well, which should be down probably in the next 2, 3 weeks. Getting expensive at these levels and he would suggest you take some profits.
oil / gas
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