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Latest Top Picks

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.
0
HOLD
Massive investment in Asia is one of the positives. Long-term opportunity is good. Interest rate sensitivity of the lifecos can have a magnified effect the stock price. As a long-term investor, don't worry about this.
insurance
COMMENT
US homebuilders. US homebuilders have done very well, with increased demand, housing starts and prices. Not clear how persistent the trend to move out of the cities will be. But overall, the trend to more single family homes will play well for them. If there were a pullback, he'd look at companies like TOL and LEN.
Unknown
DON'T BUY

BMO vs. RY He'd favour RY over BMO. BMO has a large franchise in the US midwest. RY is more active in the east and south. RY is better managed, and that's why it has a higher valuation. Won't go too far wrong owning RY. RY is well positioned with their US footprint, as well as being the largest and most dominant player in Canada.

banks
BUY

RY vs. BMO He'd favour RY over BMO. BMO has a large franchise in the US midwest. RY is more active in the east and south. RY is better managed, and that's why it has a higher valuation. Won't go too far wrong owning it. Well positioned with their US footprint, as well as being the largest and most dominant player in Canada.

banks
TOP PICK
Canadian-based aerospace, in both defence and commercial. Commercial came under pandemic pressure, but defence performed well. Last year, it had close to record profitability and strong free cashflow, using it to reduce debt. Steady and quality business. A reopening play. Discounted valuation. Well managed, strong balance sheet, chance for acquisitions. No dividend. (Analysts’ price target is $21.92)
misc industrial products
TOP PICK
Distributes automotive parts and industrial paint. Suffered during pandemic. Will benefit from increased driving post-pandemic. New CEO is well respected, paid down debt. Cheap valuation. A good turnaround play. No dividend. (Analysts’ price target is $17.80)
wholesale distributors
TOP PICK
Global seller of farm equipment. Well run. Strong crop prices benefit them, as farmers have more money to replace farm equipment. Attractive valuation, positive demand outlook. Yield is 1.60%. (Analysts’ price target is $55.75)
machinery
COMMENT
Is there too much euphoria in the market right now? A mixed bag. Economic outlook very strong with people getting vaccines, economy reopening, pent-up consumer demand. Market's had a good run. Pockets (tech, in particular, and speculative areas) are showing some froth. Up to investors to pick the right securities in the right sectors. Value-based, cyclicals will benefit. Some the of high flyers from last year can take a step back.
Unknown
COMMENT
Which economically sensitive cyclicals look most promising? A wide range. Canadian commodity companies (copper mining, steel, agriculture). What's good for commodities is good for the Canadian equity market.
Unknown
COMMENT
Are rising bond yields spooking you at all? Something to be aware of and a little bit cautious. The most highly valued areas, such as tech, and speculative areas are most susceptible to the rising rates. Bond yields moving up sharply has made some of the high PE stocks quite vulnerable.
Unknown
SELL
Market's pleased with recent results, dividend increase, special dividend, 2021 guidance. Still good value. A valuable asset. Challenge is that coal is viewed negatively from an environmental perspective. So what's the long-term viability? Speculation if coal could be replaced by shipping other commodities. He sold.
INDUSTRIAL PRODUCTS
DON'T BUY
Canadian success story. Health technology play. A popular stock. Be cautious because of the valuation. Debatable if recent acquisition will be accretive. Trades at 35x forward EBITDA, so quite expensive.
Healthcare
HOLD
Very well run. Fundamentals in the P&C insurance industry are very positive. It's a "hard market", so they're enjoying significant price increases and more volume across different lines of business. Currently making a pretty significant acquisition.
insurance
PARTIAL SELL
Very well run. Outlook for renewable power is very strong over the next 5-10 years. NPI has opportunities to grow further. Stock's run up. Bond yields moving up tends to put pressure on utilities that have a strong dividend yield. If you've had a gain, consider taking money off the table and selling 1/3 of your position. It won't get back to last year's lows.
Utilities
COMMENT
CAD vs. USD CAD has strengthened recently. One of the better currencies globally in 2021 against a weaker USD. Could be related to energy prices picking up or that there's a cyclical trade underway, commodity prices improving, more US investors moving assets to the Canadian market. He worries a bit longer term. US is in better shape than Canada in terms of the consumer, economic reopening, GDP outlook, debt-to-GDP levels. Unlikely CAD goes back to par. If CAD goes up to 85-86 cents, he'd consider moving some assets back to USD.
Unknown
PARTIAL SELL
Very well managed. Stable, resilient, long-term business. Recently got into iLottery, a growth area. PBL has become a leader in that business, and that's part of the reason for its big run. He sold part of his position, based on valuation. Still likes it long-term. Excellent company.
INDUSTRIAL PRODUCTS
PAST TOP PICK
(A Top Pick Jan 27/20, Up 66%) Very high quality business, and it's been growing. Acquisition in 2020 was quite attractive. Earnings last night very strong, beating estimates. A lot of free cashflow. Despite the run, still cheap. Easily upside to $30-35 over time. Yield is about 3.5%.
0
PAST TOP PICK
(A Top Pick Jan 27/20, Up 16%) Tough couple of quarters during Covid. Strong management, cut costs. Last quarter, pretty strong EBITDA numbers. A consolidator, so might do future acquisitions.
0
PAST TOP PICK
(A Top Pick Jan 27/20, Up 109%) He sold, albeit early. A commodity, so can be cyclical. Demand continues to be strong in NA, with tight market supply.
west coast forestry
BUY
Unified communications industry. A nice move late last year. Recently announced a pretty large acquisition, which brings up percentage of recurring revenue. Will turn out to be a good acquisition. Good entry point here.
Telecommunications
BUY
Outlook is fantastic. Stock's done well. Very efficient manufacturing. Recent expansion. Has won contracts to produce and package for other companies, and there's room to grow. Well run, high insider ownership. Still good upside.
breweries / beverages
WATCH
Great company, has gained market share. Benefitted from Covid. Very strong same store sales for 2020. Probably not repeatable for 2021, so stock's pulled back. Not cheap. Watch and see how it performs as the economy opens. Consumer spending patterns might change.
department stores
HOLD
Recent pullback just part of the general tech pullback. Not as cheap as it once was, but relative to some of its peers, it's reasonably valued. Dominant franchise. Phenomenal long-term company. If you've had significant profits, you may want to take some off the table, but a great long-term hold.
computer software / processing
WATCH
Mixed track record with production challenges, debt. Recently there's been optimism around EVs, and NFI is one of the larger companies to participate in the trend. Electrification is a small portion of their business, and there are some growth opportunities. Dividend is probably sustainable. He'd want to see more consistent performance before buying.
Automotive
BUY
Positive, long-term dynamics. IVF is becoming more accepted and more subsidized. Outlook is very positive. Still likes it at these prices. As a small cap, can be volatile. Might make some acquisitions to further consolidate supply, which would be a positive catalyst for the share price.
0
TOP PICK
Huge range of products. Great long-term track record of making acquisitions, healthy balance sheet. Poised to grow, especially with healthcare as a growth area. Significant insider ownership. Yield is 1.87%. (Analysts’ price target is $86.00)
investment companies / funds
TOP PICK
Meat segment has been doing well. Plant segment is a new and emerging area, and is #2 in NA. Trades at a significant discount to peers. Could easily be worth more than $40 a share. Yield is 2.62%. (Analysts’ price target is $35.19)
food processing
TOP PICK
Provides enterprise resource planning, mainly to governments and not for profits. New CEO's mandate is to focus on growth. Very high margin structure. Generates a lot of free cash. Trades at only 12x EBITDA, almost a value play tech company. Yield is 4%. (Analysts’ price target is $15.38)
Business Services
N/A
Market. 2021 will differ from 2020 because 2020 had an unprecedented volatility in the markets. We will see a re-opening of the economy as we get a large portion of the population vaccinated. We will see a re-allocation of spending away from the stay-at-home paradigm. He believes a large portion of the workforce will be back in the office by the end of 2021. He is not touching cruising and airline companies. These will be the last to recover. Restaurants and hotels will really benefit in 2021 as the economy re-opens.
Unknown
DON'T BUY
It is a really well run company. It is a dominant player in the toy industry. The business is very lumpy month to month, year to year. Kids are sending more time on-line and not playing with toys.
0
PARTIAL BUY
He thinks it is an opportunity and he just bought a position. It is down significantly from mid-last year. It was beat up for what he thinks are temporary reasons. He thinks this will pass but there could be some downside in the near term.
0
BUY
He quite likes the business. People have caught on to this company more recently. It is a unique play.
INDUSTRIAL PRODUCTS
BUY
The renewable space has been very hot. Over time there will be a lot more demand for renewable energy and this company will benefit.
electrical utilities
HOLD
He is pleased to see it is up today. There is a lot of concern around office real estate and the long term outlook. He thinks it is best to own the parent company.
REAL ESTATE
DON'T BUY
The dividend is probably safe. The Canadian and US banks are so cheap and out of favour that there is a lot of value to be had, but the discount on this one is not that substantial.
banks
HOLD
It is a great company and is very expensive. It is worth while holding on to it, but he has cut back on the amount as the stock has gone up.
electrical / electronic
BUY on WEAKNESS
It is a well run business and they will benefit from the growing use of data and the 5G trend. It is not overly cheap. Now might not be a bad time to look at it, though.
Telecommunications
PAST TOP PICK
(A Top Pick Dec 26/20, Up 11%) He would buy it again. As things have re-opened, the demand has come back.
0
PAST TOP PICK
(A Top Pick Dec 26/20, Up 81%) He sold mid-last year, too soon. Housing proved to be very strong. He would buy it again if lumber prices pulled back again.
west coast forestry
PAST TOP PICK
(A Top Pick Dec 26/20, Up 41%) They have a few different businesses including the land registry business in Saskatchewan. It is a very well run company. It is a top pick today. It is one of his largest positions.
0
DON'T BUY

He has a small position. It is similar to AAPL-Q. They are dominant in many of the areas in which they operate. It is not a cheap stock. But he would not bet against them.

specialty stores
BUY
It is perhaps not as exciting as some of the fast growing technology players out there. It is a very well run, steady business. It has a dominant oligopoly type of position. It pays a nice dividend.
telephone utilities
BUY on WEAKNESS
He has owned in the past and then sold it too early last year. There is a lot of good news priced into the stock but you would not want to bet against it. It would be a good opportunity to add if it pulled back for some reason.
Transportation & Environmental Services
HOLD
Over time it will come back. They have a strong position in liquor retailing and have moved into Cannabis. They are clearly going to be a survivor. They are going to be able to consolidate.
merchandising / lodging
DON'T BUY
He is cautious on the space. It will take time to figure out the long term impacts of the pandemic. It is going to take time to get back to where it once was. The question is whether business travel will ever get back to where it once was.
Transportation
TOP PICK
We don't often find a business that has this high quality profile, significant free cash flow generation, strong management, and the very good long term outlook that this business does. (Analysts’ price target is $27.00)
0
TOP PICK
It is a bet on the investing acumen of the management team. The insurance business is firing on all cylinders. They have strong revenue growth. You are going to see strong growth in book value. They are currently trading at a discount of 30% to book value. (Analysts’ price target is $515.54)
insurance
TOP PICK
They have grown significantly over the last couple of years though craft brands as well as discount brands. The won a fair bit of business in contract brewing. He thinks the outlook is good. (Analysts’ price target is $7.25)
breweries / beverages
N/A
Market. The market was looking for a reason to go down and that is what we are seeing this morning. His view is that stocks are expensive but there has been risk taking and speculative behavior. It has been driven by liquidity from central banks. It can be dangerous behavior. He still looks for good businesses that are cheap but he is taking a bit of a defensive approach right now. The market has been pricing in a Trump victory. He does not think a loss is priced in. The British are moving ahead with BREXIT. There is geopolitical risk. It is as if nobody is paying attention.
Unknown
BUY
He is moving from US financials and into Canadian banks. They represent pretty good value. Last year you saw a rally in US financials.
banks
PARTIAL SELL
He trimmed a bit. Valuation is not cheap but they are well positioned in the Cloud and gaining share. A good company to own for the long term.
computer software / processing
WAIT
He had trimmed his position a bit. They are almost the utility of the Internet. The long term trends are still very much in place. He likes it as a long term investment. Take a pause and see if we get a market correction and then pick some up.
Business Services
DON'T BUY
It's cheap and a pretty well run business, but the mutual fund business is not as good as it was 10-15 years ago. Fees in the financial services sector are under pressure. The long term challenges in the industry would keep him away from the stock.
investment companies / funds
BUY
Corona virus has caused a sell off. Ultimately this will be a short term blip to this stock. He likes the business and they have a strong competitive business. They are building big, new facilities which he thinks will be very positive. They have been buying back stock.
entertainment services
BUY
He bought in the last 3-4 months as they settled some of the legal issues they had. Management has been doing a good job of cleaning house. 12 months from now they will be out of the higher risk contract construction projects. It is really under priced. There will be volatility over the next 4 quarters.
contractors
DON'T BUY
He has been cautious around the auto sector. Demand was flat to down last year. There is demand headwind and the transition to electric vehicles. It's going to be a challenging period. It is a well run business but there are too many headwinds.
transportation equip & components
DON'T BUY
Oil. There are a lot of headwinds. It is not acting well in the way it is trading. A lot of investors are avoiding oil and gas stocks from an environmental perspective.
Unknown
DON'T BUY
He would not advocate owning it given the recent run up. We've seen excitement around hydrogen fuel cells. It runs up and then leaves investors disappointed. It ran up because they won a few contracts and last year a Chinese company took a 10% stake in them. They are still losing money. It is only worth half of where it is trading.
misc industrial products
BUY
They supply IVF products to IVF clinics. It is a well run business with good growth prospects. More and more families want to have children later in life.
0
PAST TOP PICK
(A Top Pick Feb 05/19, Down 12%) It dropped this past fall over one issue. They have been aggressively expanding into plant based protein. He still holds it and thinks it is very miss-priced. He added to his position last fall. He thinks it will take time for investors to re-price this stock.
food processing
PAST TOP PICK
(A Top Pick Feb 05/19, Down 7%) He still likes it. It is a very well run company. Today their insurance business is as strong as it has ever been. They've been doing a good job monetizing some investments on the investment side of the business. It is trading at book but peers are trading at 1.5 times book.
insurance
PAST TOP PICK
(A Top Pick Feb 05/19, Up 28%) They are automating their factories more. It has grown pretty aggressively in the health care sector. That business is not dependent on the economy. It is trading at a discount to some of its peers.
misc industrial products
DON'T BUY
There is a strong trend in plant-based meats. The valuation is 10-11 times forward revenue yet the business makes little or no money. He prefers MLF-T who have a plant-based protein business but they back it up with the traditional business.
0
HOLD
The family of companies are well run. There are headwinds investing in a mutual fund business. It rallied back recently and pays a decent dividend. The dividend is safe.
investment companies / funds
BUY on WEAKNESS
He really likes it. It has had a huge move in the last 12 months. The PE is up 25 from 13. There is a lot of positive sentiment built into it. Only buy it on a pull back.
electrical / electronic
N/A
Sector Allocation for this year. Bonds are not a good proposition, equities are expensive, so there aren't a lot of cheap assets out there. He focuses on defensive businesses that are not priced at a high multiple.
Unknown
BUY
He likes it. It is a pretty stable business and pays an attractive dividend. They have been growing their leasing business aggressively. There is stability to their cash flow.
Transportation & Environmental Services
WAIT
He does not advocate buying it right now. There is a difference between a great company and a great stock. They have done a great job. They are well positioned in on-line retail. It is at a very high multiple. Wait for a significant correction in the share price.
0
DON'T BUY
The biggest food distribution business globally. He would advocate taking profits. There are headwinds in the restaurant business.
wholesale distributors
BUY on WEAKNESS
Really well run company. A convenience store owner that expanded globally. It is challenging to predict the growth as it is dependent on M&A. As a long term proposition is good to hold on to. Wait for pull back to add.
food stores
BUY on WEAKNESS
He sold part of his position after a ramp up in 2019. It has good growth prospects in Canada still. It is defensiveness in a recessionary environment. The South American acquisition could be an interesting growth angle for them. He would recommend it on a pull back.
Consumer Products
TOP PICK
It is a defensive name that is not priced like a defensive business. They are the operator of the land registry office in Alberta. They have a long term contract and have very steady cash flow. About 45% of their revenue is from their services and technology business. 5.5% dividend and they generate a lot of free cash flow. (Analysts’ price target is $17.75)
0
TOP PICK
It is a tightly held stock, not well known. It is a leading eye care operator in Canada. They grew significantly over time to 379 locations across Canada. They made a small acquisition in the US in the luxury eye care segment. It is recession resistant and benefits from the aging demographic. It has a strong management team and he thinks it has a big growth runway as they consolidate a fragmented eye care industry. (Analysts’ price target is $42.00)
0
TOP PICK
Lumber prices and stocks were under a lot of pressure last year. Today you have strong US housing and demand. This is an attractive entry point. A bid to take it private was withdrawn and the stock dropped. (Analysts’ price target is $16.38)
west coast forestry
COMMENT
We’re 10 years into an economic expansion and bull market. There is slowing global economic growth now. There’s been a run on equity prices while earnings haven’t risen as much. Therefore, valuation is quite high right now.
Unknown
COMMENT
He isn’t calling for a recession, but valuation multiples are going up and risks for investors are up as well. He is more defensive, looking into consumer staples, dividend payers and those with strong balance sheets.
Unknown
COMMENT
The rush of mergers and take overs recently is a positive sign for equities for organic growth. Interest rates are low so companies can get good financing. He has a number of companies in his portfolio that grows through mergers and acquisition. Organic growth is hard to come by since the economy is growing more slowly.
Unknown
TOP PICK
They have a privileged position in the Toronto area market and they’ve teamed up with Brookfield. They’re building many new large casinos in Ontario. Investors should see this as a long-term position around 3. It has high cash-flow with defensive aspects to it. (Analysts’ price target is $47.25)
entertainment services
TOP PICK
A small company that is very unique in the in vitro market. Has great long term growth fundamentals. The reproductive assistance space is set to grow globally. They don’t own the clinics, but they sell the products into clinics. One of the few public companies in the space. (Analysts’ price target is $1.52)
0
TOP PICK
Populated by public and private investments in India. One stock he would tuck away for 10 years. India is the largest democracy, and corporate tax cuts have been encouraging. Fundamentals are looking great for India.
E.T.F.'s
PAST TOP PICK
(A Top Pick Nov 19/18, Up 17%) He still likes it. A high quality company with good long-term outlook. They are spending a lot of money building out casinos. It is a top pick today.
entertainment services
PAST TOP PICK
(A Top Pick Nov 19/18, Up 3%) They are in the land registry business in Saskatchewan and also a software service business. They offer services to legal and technology companies. A 5% dividend with no debt. They grow through acquisition. It is not well followed and the government of Saskatchewan owns around 30% of it.
0
PAST TOP PICK
(A Top Pick Nov 19/18, Down 6%) A craft brewing company that also receives outsourcing from bigger brewing companies. A house of brands type company. Strong management team that has grown revenue successfully. A small cap stock that isn’t well followed by investors. A potential takeover candidate.
breweries / beverages
BUY
Likes the company. There is a lot of negative sentiment around the name especially due to the Amazon effect. However, they are investing in proprietary brands which is positive. Their real estate and financial service is doing well. There is a lot of value here and is quite cheap.
specialty stores
BUY
A maker of the scratch-and-win. They recently pulled back. Long term trends in the lottery business is very positive and has grown 5-6% annually. Trading at 9.5x right now.
INDUSTRIAL PRODUCTS
COMMENT
A great business. They have expanded their business outside of Canada. They’ve had a good run this year. Slow down in tradings could have impact on their business. It is fully valued here.
other services
DON'T BUY
He doesn’t really like it. They have looked into it, and value investors, it is a good candidate. However, they’ve avoided it due to all the controversy. There is a lot of uncertainty around the future. He would stay away.
contractors
COMMENT
It’s a classic cyclical stock. It’s very cheap right now. It’s an auto company so if there is a slowdown or recession, then it could be hit.
transportation equip & components
COMMENT
It’s good value. You could class this as a laggard because they own significant mall assets that have a lot of negative sentiment. However, the portfolio is half mall and half office space. The mall segment is high quality and believes they should be able to turn around. It’s well positioned. 6% yield.
REAL ESTATE
BUY on WEAKNESS
The company was well loved by the market and was executed well. They have made good acquisitions. Then they had a fall from grace this year and there is negative sentiment now. There is a transition from gas to electric buses and this is a good niche. They have debt and are holding off on certain investments. However, there is good value here and pay a great dividend. Cash flow is also good.
Automotive
BUY
It’s a buy and hold long term stock. It’s not cheap, trading at 25x but there is solid execution and growing operations. They will benefit from the long term trend. The quality of the business merits the price.
computer software / processing
COMMENT
He’s not sure about the next few months. Long term, they have growth potential in Asia. Interest rate is a bigger issue with insurance companies. The near term performance is closely related to interest rates so it depends how you think rates will go.
insurance
DON'T BUY
It’s been a great growth story. He feels that the valuation multiple is very large and this comes with big expectations. At these levels, he wouldn’t start a position here.
0
DON'T BUY
There’s a broader industry trend in casual dining. It’s tougher for restaurants to make money. Trends are going towards delivery services and restaurants should use these to be competitive. However, there is a hit on the margin because there isn’t alcohol sales when delivered. Maybe the concept is a little tired.
investment companies / funds
COMMENT
A pretty good growth story over the last couple years. They have grown well through acquisition. Not seeing organic growth, and it’s not cheap.
other services
BUY
Results were in line with analyst estimates. Overall, banks have lagged here and represent good value here. Relative to US banks, they are trading at a good discount. Canadian housing market collapse concerns have been unfounded. Their move out of Caribbean markets was positive.
banks
DON'T BUY
Transition from combustion to electrical vehicles is a growing trend. The auto cycle has seen a recovery but it’s petered out. Lots of uncertainty around how companies will participate. A large portion of the business is still traditional automobiles.
Automotive
BUY
The recent pullback in the share price makes it worth looking at. Informed corporate buyers see a value, deducing from the purchase offer.
oil pipelines
BUY
Used to own it but he took profits. It’s essentially in a duopoly for digital advertising. There are aspects that they haven’t fully monetized so they could continue to raise earnings. Long term outlook is good, but there are regulatory headwinds.
0
COMMENT
Lots to worry about, starting with US-China trade tension. The market is worrying about it again, making it hard to trade day to day because you never know what Trump will tweet. He expects a deal to be reached at some point. Bonds are not attractive now because of low yields while high-dividend stocks are, especially those with potential to grow in the coming 10 years. He always holds some defence: this year he has been accumulating cash to 15% levels (which is high for him). He's also buying gold through ETFs (he's not a mining expert). He also has some short positions. He prefers gold to silver; he doesn't have a price target. Gold is a hedge to volatility.
Unknown
BUY
They're expanding their convenience stores to augment their commercial gas business. They're growing through acqusition. Trades at a reasonable 8.5x EBITDA. They're doing the right things and you're fine to hold this for the long term.
merchandising / lodging
BUY on WEAKNESS
They've done an excellent job getting into the single-family rental business in the U.S. with a lot of demand and rental rates moving up. TCN has done some fine acquisitions and it still trading at a reasonable multiple. US and global investors are down on Canada, given the poor oil situation, so investment hurts mid-cap companies like TCN, even though TCN's business is in America. Be patient with this.
REAL ESTATE
COMMENT
Canadian vs. American banks in the coming 6-12 months It's out of favour. He prefers American banks, but the Canadian ones offer good value. Bad press about the housing market and shorting by some investors hasn't helped, but our lending rates are still low and the banks' trading multiples are still healthy. Since they're out of favour, now's the time to consider.
Unknown
COMMENT
Sell Canadian banks now, hold cash, then buy in the fall sell-off to buy the U.S. banks or utilities? Hard to predict where the market will go. He can't advise selling the Canadian banks. It's also too late to buy the utilities (bond proxies), because they're run up to record highs. A Canadian bank pays a good 4-5% dividend. Anyone who's held them for 20-30 years has done well.
Unknown
DON'T BUY
It's performed well the past 10 years, expanding from their core packaging business, but he's concerned about them growing from acquisition. Recent quarters have disappointed and the stock was punished. The stock isn't cheap and it carries debt.
packaging / containers
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