Don Lato
Member since: Nov '07
President at
Padlock Investment Management
Padlock Investment Management
1434 Opinions
Latest Top Picks
(A Top Pick Dec 21/18, Up 17%) A company in the automotive industry. Tariffs and a slowing sector were headwinds, but they have gained market share. Earnings have grown modestly, but it trades at only 9 times earnings and offers a dividend yield just under 2%.
(A Top Pick Dec 21/18, Up 22%) A Colombian energy play. It had announced they had bought back 10% of their shares. It does not have any infrastructure constraints like its Canadian peers. It receives Brent pricing for its oil. They have lots of cash which allows them to another share buyback, likely in December. If you want to be in energy, you can't go wrong. It trades at 3 times cash flow.
(A Top Pick Dec 21/18, Up 63%) In the midst of trade war concerns, the timing to buy was great. It has rebounded every since early 2019, trading to new highs. iPhone 11 first orders are reportedly quite strong. The stock trades at 18 times earnings, but inline with the last 10 year valuations. His biggest holding.
A very innovative company. They announced a new component for electric cars that will allow hybrids to go to only one engine. The contract begins 2022. Trades at only 9 times earnings. They have disposed of an asbestos related company that cost them $180 million. Yield 1.75% (Analysts’ price target is $45.27)
They are involved in in-vitro fertilization. The industry is about $1 billion and they are the top 10 companies. As more women wait to have their first pregnancy, he thinks it will benefit by future demand. It trades at 10 times EBITDA, compared to the industry leader that trades at 30 times. It can grow through acquisition or organically or could also be a take out target. Yield 0% (Analysts’ price target is $1.55)
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COMMENT
COMMENT
October 30, 2019
Market Outlook The Bank of Canada has left some room for further interest rate increases, despite keeping rates flat today. Western resources are hurting and they will have to deal with that eventually. If the US cuts rates, Canada will have higher rates than the US -- helping the Canadian dollar. This will hurt some Canadian company earnings, but we have come to live with currency in these ranges. Q3 earnings were pessimistic, but revenues have surprised along with earnings. 70% of reporting companies have beat their estimates thus far.
Market Outlook The Bank of Canada has left some room for further interest rate increases, despite keeping rates flat today. Western resources are hurting and they will have to deal with that eventually. If the US cuts rates, Canada will have higher rates than the US -- helping the Canadian dollar. This will hurt some Canadian company earnings, but we have come to live with currency in these ranges. Q3 earnings were pessimistic, but revenues have surprised along with earnings. 70% of reporting companies have beat their estimates thus far.
Don Lato
President, Padlock Investment Management
COMMENT
COMMENT
October 30, 2019
Canadian banks? It is not a bad time to buy. They have lagged, especially in Q3, but seem to be finding their stride. They have stable profits and good earnings trading at cheap PE ratios. TD has lagged, because of their Ameritrade share trade, when brokerages in the US went to zero commissions. He would still favour buying TD.
Canadian banks? It is not a bad time to buy. They have lagged, especially in Q3, but seem to be finding their stride. They have stable profits and good earnings trading at cheap PE ratios. TD has lagged, because of their Ameritrade share trade, when brokerages in the US went to zero commissions. He would still favour buying TD.
Don Lato
President, Padlock Investment Management
COMMENT
COMMENT
October 30, 2019
Canadian banks? It is not a bad time to buy. They have lagged, especially in Q3, but seem to be finding their stride. They have stable profits and good earnings trading at cheap PE ratios. TD has lagged, because of their Ameritrade share trade, when brokerages in the US went to zero commissions. He would still favour buying TD.
Canadian banks? It is not a bad time to buy. They have lagged, especially in Q3, but seem to be finding their stride. They have stable profits and good earnings trading at cheap PE ratios. TD has lagged, because of their Ameritrade share trade, when brokerages in the US went to zero commissions. He would still favour buying TD.
banks
COMMENT
COMMENT
October 30, 2019
LULU vs GOOS? He would favour LULU as it has a more diversified product line. Both trade at high multiples. He does not own either.
LULU vs GOOS? He would favour LULU as it has a more diversified product line. Both trade at high multiples. He does not own either.
clothing
COMMENT
COMMENT
October 30, 2019
LULU vs GOOS? He would favour LULU as it has a more diversified product line. Both trade at high multiples. He does not own either.
LULU vs GOOS? He would favour LULU as it has a more diversified product line. Both trade at high multiples. He does not own either.
household goods
BUY
BUY
October 30, 2019
It has lagged due to issues with its foreign assets. He likes the Canadian banks in general. He would rank it 2nd or 3rd in terms of the Canadian big banks.
It has lagged due to issues with its foreign assets. He likes the Canadian banks in general. He would rank it 2nd or 3rd in terms of the Canadian big banks.
banks
BUY
BUY
October 30, 2019
Antitrust? It hit all time highs a few days ago before earnings were released. They built in some provisions to protect against adverse regulatory outcomes and that was a drag on earnings, so the share price fell after the announcement. The antitrust issues have heated up again, but if they get fined they have over $100 per share in cash to pay fines. At the end of the day, he thinks they will argue that they give away their services for free so how are consumers being financially harmed? A good entry price right here.
Antitrust? It hit all time highs a few days ago before earnings were released. They built in some provisions to protect against adverse regulatory outcomes and that was a drag on earnings, so the share price fell after the announcement. The antitrust issues have heated up again, but if they get fined they have over $100 per share in cash to pay fines. At the end of the day, he thinks they will argue that they give away their services for free so how are consumers being financially harmed? A good entry price right here.
Business Services
HOLD
HOLD
October 30, 2019
He has liked this stock for some time. They disappointed analysts last year and that is now behind them. You should start to see very good year over year comparisons. The multiple got traded down into 12 times earnings. As the comparisons improve he expects the multiple to improve taking the stock back to the mid-$30s share price. It may be by the end of next year. Yield 3.6%
He has liked this stock for some time. They disappointed analysts last year and that is now behind them. You should start to see very good year over year comparisons. The multiple got traded down into 12 times earnings. As the comparisons improve he expects the multiple to improve taking the stock back to the mid-$30s share price. It may be by the end of next year. Yield 3.6%
household goods
DON'T BUY
DON'T BUY
October 30, 2019
Oil prices? He doesn't have an oil price forecast. CPG is like a lot of other companies -- divesting assets and paying down debt. He thinks Canadian equities are dead in the water here and does not know what catalyst will help change things.
Oil prices? He doesn't have an oil price forecast. CPG is like a lot of other companies -- divesting assets and paying down debt. He thinks Canadian equities are dead in the water here and does not know what catalyst will help change things.
oil/gas
DON'T BUY
DON'T BUY
October 30, 2019
He would avoid FB, selling out a year ago. Just too many accusations about management integrity. Multiples have come down, but he would still avoid it. Elizabeth Warren is gunning against Zuckerberg -- not good.
He would avoid FB, selling out a year ago. Just too many accusations about management integrity. Multiples have come down, but he would still avoid it. Elizabeth Warren is gunning against Zuckerberg -- not good.
BUY
BUY
October 30, 2019
other services
BUY
BUY
October 30, 2019
other services
HOLD
HOLD
October 30, 2019
An integrated major in Canada. If investors ever come back into the energy space, they are going to buy the bigger companies first. Plus it pays just under a 4% dividend. He would not expect a big move higher anytime though. It trades generally between $40-$48.
An integrated major in Canada. If investors ever come back into the energy space, they are going to buy the bigger companies first. Plus it pays just under a 4% dividend. He would not expect a big move higher anytime though. It trades generally between $40-$48.
integrated oils
PAST TOP PICK
PAST TOP PICK
October 30, 2019
(A Top Pick Dec 21/18, Up 17%) A company in the automotive industry. Tariffs and a slowing sector were headwinds, but they have gained market share. Earnings have grown modestly, but it trades at only 9 times earnings and offers a dividend yield just under 2%.
(A Top Pick Dec 21/18, Up 17%) A company in the automotive industry. Tariffs and a slowing sector were headwinds, but they have gained market share. Earnings have grown modestly, but it trades at only 9 times earnings and offers a dividend yield just under 2%.
Automotive
PAST TOP PICK
PAST TOP PICK
October 30, 2019
(A Top Pick Dec 21/18, Up 22%) A Colombian energy play. It had announced they had bought back 10% of their shares. It does not have any infrastructure constraints like its Canadian peers. It receives Brent pricing for its oil. They have lots of cash which allows them to another share buyback, likely in December. If you want to be in energy, you can't go wrong. It trades at 3 times cash flow.
(A Top Pick Dec 21/18, Up 22%) A Colombian energy play. It had announced they had bought back 10% of their shares. It does not have any infrastructure constraints like its Canadian peers. It receives Brent pricing for its oil. They have lots of cash which allows them to another share buyback, likely in December. If you want to be in energy, you can't go wrong. It trades at 3 times cash flow.
oil/gas
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