Stock Opinions by Don Lato - Stockchase Experts
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Don Lato @

On Stockchase since : Nov 2007

President at Padlock Investment Management

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Stock Opinions by Don Lato - Stockchase Experts

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COMMENT
General Market Comment 

October 29, 2018

A wild day today when the market flirted with a correction. Confusing times. But be positive and constructive. It's painful while it lasts, but he doesn't see signs of an end to the bull market. In 10% corrections since 1928, 60% of them didn't fall further. On average the third year of a US presidential term sees 16% returns, 21% if Republican. A recessionary indicator he saws says there's 0% chance of recession. Since 1978, the average return the year following a correction is 18.5%. That said, we don't know how the trade war (US-China) will resolve. That fear of a trade war triggered today's selling. He thinks the selling is largelty algorithm-driven, perhaps 66% according to one study. Look for sound businesses trading at reasonable valuations as earnings grow year over year. He still
sees earnings growth in 2019. The TSX has a lower/better valuation than America's, but Canadian relies on energy which will remain slumped. He favours the U.S. market.

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A wild day today when the market flirted with a correction. Confusing times. But be positive and constructive. It's painful while it lasts, but he doesn't see signs of an end to the bull market. In 10% corrections since 1928, 60% of them didn't fall further. On average the third year of a US presidential term sees 16% returns, 21% if Republican. A recessionary indicator he saws says there's 0% chance of recession. Since 1978, the average return the year following a correction is 18.5%. That said, we don't know how the trade war (US-China) will resolve. That fear of a trade war triggered today's selling. He thinks the selling is largelty algorithm-driven, perhaps 66% according to one study. Look for sound businesses trading at reasonable valuations as earnings grow year over year. He still
sees earnings growth in 2019. The TSX has a lower/better valuation than America's, but Canadian relies on energy which will remain slumped. He favours the U.S. market.

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Don Lato

President, Padlock Investment M...

Price Price
$0.020
Owned Owned
Unknown

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WATCH

Canadian retailing has been one of the weakest sectors on the TSX. Rising wages is one factor. CTC pays 12x 2019 earnings, so it's still reasiably valued. He's worried about the major acquisition of the skiwear company, Helly Hansen. This is different from Sportchek or Mark's Work Wearhouse. He wants to see how CTC absorbs the skiwear company first. Skiing is a different business for CTC, so he doesn't see the fit.

specialty stores
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Canadian retailing has been one of the weakest sectors on the TSX. Rising wages is one factor. CTC pays 12x 2019 earnings, so it's still reasiably valued. He's worried about the major acquisition of the skiwear company, Helly Hansen. This is different from Sportchek or Mark's Work Wearhouse. He wants to see how CTC absorbs the skiwear company first. Skiing is a different business for CTC, so he doesn't see the fit.

specialty stores
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Don Lato

President, Padlock Investment M...

Price Price
$149.710
Owned Owned
Unknown

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PAST TOP PICK

(Past Top Pick Nov. 30, 2017, Down 18%) It just hit 52-week lows, but its earnings from fallen from 18x to 13x. ZZZ had a few weak same-store sales in recent quarters, but not disastrous. The retail story isn't sexy compared to, say, cannabis where investors have poured in. They still dominate mattress sales in Canada. Their new ad campaign is pushing accessories which sees revenue growth. There are fears that the mattress-in- a-box companies will compete, but ZZZ also sells a box beds. It's a mystery to him why Sleep has been hammered. A few good quarters will turn it around. You can buy it now.

household goods
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(Past Top Pick Nov. 30, 2017, Down 18%) It just hit 52-week lows, but its earnings from fallen from 18x to 13x. ZZZ had a few weak same-store sales in recent quarters, but not disastrous. The retail story isn't sexy compared to, say, cannabis where investors have poured in. They still dominate mattress sales in Canada. Their new ad campaign is pushing accessories which sees revenue growth. There are fears that the mattress-in- a-box companies will compete, but ZZZ also sells a box beds. It's a mystery to him why Sleep has been hammered. A few good quarters will turn it around. You can buy it now.

household goods
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Don Lato

President, Padlock Investment M...

Price Price
$26.280
Owned Owned
Yes

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PAST TOP PICK

(Past Top Pick Nov. 30, 2017,Up 8%) The Amazon fear of taking over this space was unfounded. WBA sales are a little weak, but beat on earnings. Trades at 11x earnings and pays a 2.5% dividend which they've increased 42 years in a row and he expects another in January. A defensive play.

specialty stores
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(Past Top Pick Nov. 30, 2017,Up 8%) The Amazon fear of taking over this space was unfounded. WBA sales are a little weak, but beat on earnings. Trades at 11x earnings and pays a 2.5% dividend which they've increased 42 years in a row and he expects another in January. A defensive play.

specialty stores
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Don Lato

President, Padlock Investment M...

Price Price
$76.820
Owned Owned
Yes

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BUY

He's longed owned it and happy with it. They just closed a purchased and have grown a lot by acquisition over the years. Equity deal brought their stock down a bit, but their balance is much better, they have assimilated those purchases, and are in the position to do more. Nice dividend, but haven't raised it in a while, because they're spending their cash on purchases. Steady as she goes here. Growth will pick up in 2019.

machinery
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He's longed owned it and happy with it. They just closed a purchased and have grown a lot by acquisition over the years. Equity deal brought their stock down a bit, but their balance is much better, they have assimilated those purchases, and are in the position to do more. Nice dividend, but haven't raised it in a while, because they're spending their cash on purchases. Steady as she goes here. Growth will pick up in 2019.

machinery
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Don Lato

President, Padlock Investment M...

Price Price
$57.420
Owned Owned
Yes

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COMMENT
Tourmaline Oil Corp(TOU-T) 

October 29, 2018

Nat gas prices have barely risen in Canada. This is one of his few Canadian energy stocks. They signed long-term contracts priced when natural gas was higher, and sell in various markets so benfit from those currencies. Their cash flow growth has slowed, but it's 3.7x this year and 3.2x in 2019. Well-managed company. Bide your time here. One of the best stocks in this sector.

oil/gas
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Nat gas prices have barely risen in Canada. This is one of his few Canadian energy stocks. They signed long-term contracts priced when natural gas was higher, and sell in various markets so benfit from those currencies. Their cash flow growth has slowed, but it's 3.7x this year and 3.2x in 2019. Well-managed company. Bide your time here. One of the best stocks in this sector.

oil/gas
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Don Lato

President, Padlock Investment M...

Price Price
$19.140
Owned Owned
Yes

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COMMENT
General Market Comment 

October 29, 2018

Where are the FAANGs and S&P going? Two of the FANGs are highly valued while the others are reasonable. The higher ones are falling faster. He invests fundamentally for the long run. A rally could start tomorrow or the day after the Midterms or six weeks from now. He's comfortable with the fundamentals in the economy, pending a black swan event.

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Where are the FAANGs and S&P going? Two of the FANGs are highly valued while the others are reasonable. The higher ones are falling faster. He invests fundamentally for the long run. A rally could start tomorrow or the day after the Midterms or six weeks from now. He's comfortable with the fundamentals in the economy, pending a black swan event.

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Don Lato

President, Padlock Investment M...

Price Price
$0.020
Owned Owned
Unknown

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COMMENT
General Market Comment 

August 23, 2018

Market. Probably the worst week ever for the US President and still little market reaction. He thinks this is a positive sign. Valuations are fair. We had a great earnings season. He remains constructive. A bump in the rates is not unexpected. It won’t draw money out of equities, which on a relative basis is still the best place to be. You need to have some exposure to stocks that are not sensible to trade wars. It is business as usual. There is a lot of blaster without a lot of action out there.

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Market. Probably the worst week ever for the US President and still little market reaction. He thinks this is a positive sign. Valuations are fair. We had a great earnings season. He remains constructive. A bump in the rates is not unexpected. It won’t draw money out of equities, which on a relative basis is still the best place to be. You need to have some exposure to stocks that are not sensible to trade wars. It is business as usual. There is a lot of blaster without a lot of action out there.

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Don Lato

President, Padlock Investment M...

Price Price
$0.020
Owned Owned
_N/A

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HOLD
Shopify Inc.(SHOP-T) 

August 23, 2018

Great company. Darling of the Canadian tech stocks. Can’t buy stocks for his clients trading at 210 times next year earnings. He’d wait for an earning miss.  

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Great company. Darling of the Canadian tech stocks. Can’t buy stocks for his clients trading at 210 times next year earnings. He’d wait for an earning miss.  

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Don Lato

President, Padlock Investment M...

Price Price
$179.800
Owned Owned
No

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HOLD
Pfizer Inc(PFE-N) 

August 23, 2018

Very much a value stock. Not a lot of growth. You can’t too far wrong at these levels. He likes a little more growth.  

biotechnology/pharmaceutical
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Very much a value stock. Not a lot of growth. You can’t too far wrong at these levels. He likes a little more growth.  

biotechnology/pharmaceutical
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Don Lato

President, Padlock Investment M...

Price Price
$42.200
Owned Owned
No

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HOLD
Cineplex Inc(CGX-T) 

August 23, 2018

Very strong management team. They are diversifying the business. One of the interesting things that is happening is that the cinema stocks had a bounced as Amazon.com (AMZN-Q) taking a position on Landmark Cinemas in the US. That sparked interest in the cinema stocks. (Analysts’ price target is $35.36)

other services
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Very strong management team. They are diversifying the business. One of the interesting things that is happening is that the cinema stocks had a bounced as Amazon.com (AMZN-Q) taking a position on Landmark Cinemas in the US. That sparked interest in the cinema stocks. (Analysts’ price target is $35.36)

other services
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Don Lato

President, Padlock Investment M...

Price Price
$32.650
Owned Owned
No

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SELL

Given that the company is going private, should I hold or sell? Trading a little above the bid price. Probably the feeling is that the board is going to weight in. He would sell. Professional arbitragers might assess better the odds and try to get a dollar or two more. He sold for his clients when the deal was announced. 

agriculture
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Given that the company is going private, should I hold or sell? Trading a little above the bid price. Probably the feeling is that the board is going to weight in. He would sell. Professional arbitragers might assess better the odds and try to get a dollar or two more. He sold for his clients when the deal was announced. 

agriculture
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Don Lato

President, Padlock Investment M...

Price Price
$18.460
Owned Owned
No

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COMMENT
Kraft Heinz Company(KHC-Q) 

August 23, 2018

A company that he is starting to look at more closely. Valuation has come down. People are still eating Kraft dinner and so. 4.2% yield. (Analysts’ price target is $68.00)

food processing
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A company that he is starting to look at more closely. Valuation has come down. People are still eating Kraft dinner and so. 4.2% yield. (Analysts’ price target is $68.00)

food processing
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Don Lato

President, Padlock Investment M...

Price Price
$58.800
Owned Owned
No

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BUY
Applied Materials(AMAT-Q) 

August 23, 2018

Bought the stock a couple of months ago. Still puts strong numbers. Multiple is less than 10 times earnings. One of the concerns is that the semiconductors companies pulled back on their order books a little bit. A buying opportunity. You are exposed to all the hot tech areas with this company. 

electrical/electronic
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Bought the stock a couple of months ago. Still puts strong numbers. Multiple is less than 10 times earnings. One of the concerns is that the semiconductors companies pulled back on their order books a little bit. A buying opportunity. You are exposed to all the hot tech areas with this company. 

electrical/electronic
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Don Lato

President, Padlock Investment M...

Price Price
$42.790
Owned Owned
Yes

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SELL
Maxar Technologies(MAXR-T) 

August 23, 2018

Was going to buy it before the report came out. When short sellers start talking about accounting irregularities, that is a situation you want to avoid. If you own it, it is a tough one. Too much risk and too much uncertainty. (Analysts’ price target is $81.42)

computer software/processing
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Was going to buy it before the report came out. When short sellers start talking about accounting irregularities, that is a situation you want to avoid. If you own it, it is a tough one. Too much risk and too much uncertainty. (Analysts’ price target is $81.42)

computer software/processing
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Don Lato

President, Padlock Investment M...

Price Price
$44.610
Owned Owned
No

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