Opinions by Gordon Reid | StockChase
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Gordon Reid

President

ON STOCKCHASE SINCE Oct 2007

GoodReid Investment Counsel
47 Colborne StreetSuite 400Toronto, ONM5E 1P8
T: 416.364.0890 F: 416.364.1788 info@goodreid.com


Opinions by Gordon Reid


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2017-11-10

N/A
A Comment -- General Comments From an Expert 

Market. For now, earnings are justifying what you are paying for stocks. We are trading at about 20% premium to normalized valuations, but you have to look at the backdrop, and that is fairly friendly to equities. We are in a continuing low interest rate environment, and corporate earnings are very, very strong. As long as that backdrop continues, there is a relative equilibrium from a valuation standpoint. If the Fed follows through with tightening, that is a signal to him that the economy is healthy.

Gordon Reid

President, GoodReid Investment Counsel

Price: $0.020
Owned: _N/A

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2017-11-10

PAST TOP PICK
Bank of America (BAC-N)

(A Top Pick Nov 30/16. Up 27%.) Banks are going to do well in this environment, because they are set up for it. They’ve had 8-9 years to repair their balance sheets. The economy is reasonably good. Feels there is a longer runway for the banks, because before the yield curve turns over, it will get steeper.

banks
Gordon Reid

President, GoodReid Investment Counsel

Price: $26.510
Owned: Yes

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2017-11-10

COMMENT
Blackstone Group LP (BX-N)

Has done well, but not sure this is the time in the cycle when you want to own a company that looks for opportunities in a quasi-distressed market. This is a limited partnership, and for Canadians owning Limited Partnerships, there are tax repercussions. Before going into a limited partnership, you should get tax advice.

investment companies/funds
Gordon Reid

President, GoodReid Investment Counsel

Price: $32.130
Owned: Unknown

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2017-11-10

PAST TOP PICK
Celgene Corp (CELG-Q)

(A Top Pick Nov 30/16. Down 14%.) Reported earlier this month. Just prior to reporting, took a phase 3 drug out of the pipeline, that had a lot of promise. It was a drug that treated Crohn’s disease. It will build back some of the confidence, but it will take time. The return opportunities are good enough to continue holding the position.

Consumer Products
Gordon Reid

President, GoodReid Investment Counsel

Price: $102.340
Owned: Yes

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2017-11-10

DON'T BUY
Cisco (CSCO-Q)

This is in a sector that has a great many opportunities. If you want to have a good representation in your tech space, there are a lot of choices he would rank higher than this. They work very, very hard to reinvent themselves, and are doing a decent job. Trading at a fairly reasonable multiple. However, the growth of revenue and cash flow is not impressive.

electrical/electronic
Gordon Reid

President, GoodReid Investment Counsel

Price: $33.990
Owned: Unknown

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2017-11-10

DON'T BUY
CSX Corp (CSX-Q)

(Market Call Minute.) A very expensive railway. Hunter Harrison has taken over and they’ve built in a huge premium, which he doesn’t think is deserved. He would prefer Union Pacific which is better run and has a better valuation.

Transportation
Gordon Reid

President, GoodReid Investment Counsel

Price: $50.080
Owned: No

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2017-11-10

COMMENT
CVS Health Corp (CVS-N)

This has responded to the Amazon (AMZN-Q) factor. They are rumoured to be talking to Aetna for a takeover. That would create a vertically integrated business model. If they can create a model where the patient experience is owned by the CVS group, then people are less and less likely to want to interrupt that relationship. That is the response we are starting to see.

specialty stores
Gordon Reid

President, GoodReid Investment Counsel

Price: $70.990
Owned: Unknown

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2017-11-10

DON'T BUY
Equifax Inc. (EFX-N)

This was the big cyber breach in personal information on hundreds of millions of consumers. It’s a broken story. It’s early days in terms of class action lawsuits. Too risky.

other services
Gordon Reid

President, GoodReid Investment Counsel

Price: $108.740
Owned: No

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2017-11-10

COMMENT
Facebook (FB-Q)

(Market Call Minute.) This is growing very, very rapidly. Even though this is a mammoth company with over 2 billion active monthly users, they grew revenues 47% year-over-year last quarter.

Gordon Reid

President, GoodReid Investment Counsel

Price: $178.460
Owned: Yes

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2017-11-10

DON'T BUY
General Electric (GE-N)

This is a mess, and not one that any individual is going to solve in a quarter or 2. Monday is a very important day, because they are doing an investor presentation. Earnings are likely not going to be much north of $1 a share. Their cash flow is in terrible shape. If they cut the dividend, which he expects, and lay the groundwork for a long-term recovery, the stock might have some legs into the low $20s. He wouldn’t want to be involved in its early days.

electrical/electronic
Gordon Reid

President, GoodReid Investment Counsel

Price: $20.490
Owned: Unknown

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2017-11-10

TOP PICK
Alphabet Inc. (A) (GOOGL-Q)

On their latest report, they grew revenues 24% year-over-year. A very large company, but still growing very, very smartly. They are starting to monetize a lot of their supplementary initiatives. YouTube is really taking hold, with 1.5 billion monthly users watching at least an hour or more. A very real streaming opportunity for people in the over-the-top world in competition for eyeballs. They also have Waymo, a self driving car initiative, which is going to be amazing. Google has long been reputed to be behind the curve on the Cloud. Just as last week, they did a joint venture with salesforce.com, which is going to make a difference. At 28X earnings, this is a good solid holding for the long-term. (Analysts’ price target is $1180.)

Business Services
Gordon Reid

President, GoodReid Investment Counsel

Price: $1044.150
Owned: Yes

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2017-11-10

TOP PICK
Halliburton Co (HAL-N)

An oil service company. Along with the industry, they have come out of a trough that they hadn’t seen since the late 1980s. It was a very deep trough, and they are coming out of it. Their latest report was very upbeat. Rig counts are improving. They are gaining share internationally. Where just a week before, Schlumberger (SLB-N) had said their international business was suffering, this company came on and said “Ours isn’t”. Dividend yield of 1.6%. (Analysts’ price target is $54.)

oil/gas field services
Gordon Reid

President, GoodReid Investment Counsel

Price: $44.580
Owned: Yes

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2017-11-10

COMMENT
JP Morgan Chase & Co (JPM-N)

Banks are taking a breather now. The spread between 2 year and 10 year yields are very, very low. Because of this, the yield curve has flattened, which isn’t an environment where banks do well. However, these are very, very healthy companies. Thinks the banks are a good choice.

Financial Services
Gordon Reid

President, GoodReid Investment Counsel

Price: $97.510
Owned: No

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2017-11-10

TOP PICK
KB Home (KBH-N)

He is a heavy investor in homebuilders through his US small-cap portfolio. He has 5 homebuilders out of the 40 stocks that make up that portfolio. They’ve done extremely well this year on average, and the 5 of them have grown 55%. Dividend yield of 0.4%. (Analysts’ price target is $25.)

contractors
Gordon Reid

President, GoodReid Investment Counsel

Price: $28.110
Owned: Yes

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2017-11-10

DON'T BUY
Macys Inc. (formerly Federated Department Stores) (M-N)

Retail sales is not going away, it is just the model and delivery sources that is changing. Online is taking from bricks and mortar. There won’t be one winner and one loser. There’ll just be a tug-of-war. The numbers basically support online growing at 12%-14%, and bricks and mortar growing at 1% or 2%. That is going to go on for some time. This company has a lot of embedded capital, and they can’t be nimble. They have to create a new desire for people to come into their stores.

department stores
Gordon Reid

President, GoodReid Investment Counsel

Price: $19.980
Owned: No

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