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Stock Opinions by Colin Stewart

COMMENT
The TSX has been on a 14-day run, pausing this morning. The outlook is reasonably positive, given how consumers are flush and are spending more on restaurants and travel with more to come. Stocks are expensive, but there's better value in Canada than the U.S., so there's room to run in Canada with pockets of value. There's a lot of uncertainty and disagreement over inflation, driven by supply shortages. If inflation stays around 3%, this could lead to problems, placing some risk on stocks.
Unknown
BUY on WEAKNESS
He's long owned this, didn't do much for a while, but has made a good move this year. Trades at only 8x EBITDA. Strong managers. The stock has had a good pullback to $26, which an entry point now. They peaked in July-August, but doesn't know it has pulled back, maybe concerns over Saskatchewan's real estate market (Covid is hitting that province now). ISV is a high-quality business and pays a nice dividend.
0
WATCH
He follows it. There are concerns over ESG since they ship coal through their main terminal. Recently, they signed a deal to ship a lot of potash from Saskatchewan. WTE raised their dividend and guidance recently. There's been a lot of shorting here, but the business is resilient. Those shorts have been squeezed in recent months.
INDUSTRIAL PRODUCTS
WATCH
He doesn't own oil. CPG has been in the penalty box for a while over concerns of leverage and the management team. Whitecap and Tamarack, for example, have stronger managers and growth profiles. However, more recently CPG has progressed by selling weaker asseets. CPG trades at a discount to those peers. Some investors recently see this as a value play in energy. Keep an eye on this and do some homework.
oil / gas
BUY on WEAKNESS
He likes it. They made a big acquisition this year, which triggered a stock run, but recently a pullback when he picked up shares. Valuation is good vs. peers. They often exceed guidance and analysts' expectations. He targets $4.50-5.
Telecommunications
BUY
What entry point? Now. He's owned this 7 years. Well-managed and have made good past acquisitions, though not recently so he expects some to come. Pays a nice dividend and trades at a decent PE. It's pulled back from $85 to $62. The supply constraint doesn't worry him; managers pre-bought inventory so they have stock to get them through this period.
investment companies / funds
BUY on WEAKNESS
Shares have really come off Well-run, focusing on green power which is a growth area for the coming decade as the world moves away from carbon power. They do issue equity, so the stock has come off. There are concerns over weak wind power conditions in Europe, which has pressured the entire sector, but he isn't worried. Also yields have inched up recently and could in the future, but such pressures will be temporary. AQN pays a good dividend. Buy in dips.
electrical utilities
BUY
Has great assets and managers. Pays a strong dividend. It's a blue chip to buy and tuck away. It compounds capital over time and grows its dividend over time.
mngmnt / diversified
BUY
A great compounder over time with a global presence now. There have been concerns over e-cars, which ATD can adapt, like in Norway where e-cars are prevalent and ATD is adapting. He added shares six months ago when they couldn't buy Carrefour. It has good prospects and is a blue chip stock to hold long term.
food stores
PAST TOP PICK
(A Top Pick Jun 30/21, Up 5%) Well-operated within aerospace. They make landing gear. With airline traffic coming back, it'll help HRX, while their defence business helped it withstand the pandemic. It trades at a big discount to peers. He expects them to make another acquisition sometime. A good capital builder and allocator. They focus on a niche, and he expects personal travel to rebound with business travel to follow in the next few quarters. It remains a core position for him.
misc industrial products
PAST TOP PICK
(A Top Pick Jun 30/21, Up 12%) He trimmed a lot of his shares recently. It's a turnaround story, having brought in new managers doing a good job. He's seen many companies in auto supplies run into supply chain shortages--demand is there, but not supply, so this is a near-term risk. Long term still looks good.
wholesale distributors
PAST TOP PICK
(A Top Pick Jun 30/21, Down 25%) The macro conditions are good now with demand for farm equipment. Farmers are flush and are buying. However, AFN got hit with a lawsuit with a grain bin collapse on the west coast--a temporary issue, he thinks. He holds a few shares.
machinery
BUY
It's up 40% since its SPAC Legato, but it's still cheap like all steel companies, given strong steel demand and limited steel capacity. With a focus on environmentalism, they've cleaned up their balance sheet from years ago and it's much cleaner now. The outlook is quite good and stock prices are cheap.
steel
WATCH
It'll remain sideways near-term, but in the past 10 years it's performed huge. It enjoys nearly a monopoly in Canada and have done well diversifying like selling data to the financial industry and into derivatives. The outlook is good. Probably is the stock isn't cheap. Watch for a pullback.
other services
BUY
Transalta vs. Transalta Renewables Transalta, becuse it's cheaper, and it owns 40% of TR anyway. They just announced a plan to transition away from coal and gas into wind and power. It trades at 8x EBITDA, whereas TR is 13x.
electrical / electronic
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