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Stock Opinions by Colin Stewart

COMMENT
Markets in the summer. We'll see if sell in May and go away comes true this year. Optimistic on the economic outlook. Canada has lagged the broader reopening, but now starting to see things open up. Consumers have high savings rates and want to get out and spend money. Equity markets already have the good news built in. More of a stock-pickers market, not everything is going to work. More challenging to make money going forward. Investors will have to be more selective.
Unknown
COMMENT
Gambling mentality. Speculative activity is one of the risks to the outlook. Currently contained to areas such as SPACs, crypto and hot IPOs. Meme stocks such as AMC are concerning. These times of speculative activity usually don't end well and someone is left holding the bag. Investors need to be wary. Ask what's driving a stock, fundamentals or speculation?
Unknown
HOLD
High quality. Focused on defense. Nothing wrong with it. 11x enterprise value to EBITDA. Nice dividend of 2.6% or so. Large company, steady outlook. Not expecting huge growth, pretty modest over next couple of years. You can hold it for the yield.
Transportation
DON'T BUY
He's cautious on airline stocks. Misconception that if the stock is down a lot, it's undervalued, and there's a lot of catch-up. He's positive on the reopening. But the enterprise value of the business is back to pre-pandemic highs. Issued a lot of debt and equity, resulting in an expensive valuation. Look elsewhere, perhaps to aerospace.
Transportation
HOLD
Pretty steady, long-term position. Steady pipeline business, nice dividend. Revenues guaranteed by long-term contracts. Good dividend history. Uncertainty in the near term. Good one to hold long-term in a TFSA.
oil / gas pipelines
BUY
Recent acquisition will help them transform to a faster growth company with more customers, recurring revenue from SaaS, and US exposure. Likes management. Main reason share price has pulled back is the correction in growth stocks. Looks cheap here, and he's been adding at these levels.
Telecommunications
BUY
Likes it. Correction in last 4 months has hit the sector. Robust outlook for the next 5 years. Solid management team. Expects continued growth and perhaps increases in dividend. Adding at these prices makes sense.
electrical utilities
BUY
Higher risk, as it's based in Nicaragua. Outlook is positive. Discounted valuation compared to larger peers. Astute management. Over time, should grow and diversify geographically. Price pullback due to pullback in the renewable sector plus uncertainty in Nicaragua. Cheap, nice yield, could be a takeover candidate.
INDUSTRIAL PRODUCTS
PARTIAL SELL
High likelihood of the deal going through. If the deal doesn't go through, would have fairly significant downside. One strategy might be to sell a partial position, and put in another telco. Canadian telcos are steady businesses, modest growth, nice dividends.
Cable
WATCH
Fantastic service for consumers. Overall outlook is good. A reopening play. Caveat is that it's not making money. He's watching it, and once it's profitable, he'd consider investing.
Technology
PAST TOP PICK
(A Top Pick Mar 17/20, Down 17%) Really well run. Benefited from pandemic trends. Pulled back because of fears it can't replicate those results. Good long-term business, strong balance sheet, good management. Next leg up will probably be making an acquisition. Price is good value here.
investment companies / funds
PAST TOP PICK
(A Top Pick Mar 17/20, Down 6%) Plant-based area has earned a lot of attention. Unfairly penalized for the slower ramp up of meat alternatives. Trades at only 7x EBITDA, without the plant-based component. If the plant-based sector was spun out, share price would easily be over $40. Be patient, a ton of value, core business is strong.
food processing
PAST TOP PICK
(A Top Pick Mar 17/20, Up 0%) New CEO last year who's doing things to accelerate the business, which he sees as positive. SaaS for the education sector. Trying to grow organically and by acquisition. Low valuation. Optimistic over the next few years.
Business Services
WAIT
Well run. Benefited during the pandemic. Stepped up their online game. Online demand will continue. Tough comparisons to last year. May be better to wait and see how investors react over the next few quarters. Not huge downside, but more of a wait and see.
food stores
HOLD
Really likes the business. Land registry technology in Saskatchewan, a monopoly position. Provide services globally. Earnings and EBITDA have grown, so there's been multiple expansion. It's a comparably cheap stock, nice dividend, tons of free cash. Opportunities to make acquisitions. Long-term outlook is very good.
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