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Stock Opinions by Gerald Allaye-Chan

HOLD
Long-term this one is definitely a hold. Has been very well managed and diversified. Will be a winner in the long-term.
banks
BUY on WEAKNESS
Great set of unconventional natural gas assets in North America as well as some growth assets of light and sweet crude in Asia. Will be funded by the strong cash flows they are generating from the UK North Sea. Likes the valuation and the balance sheet and would add on a pullback.
oil / gas
BUY on WEAKNESS
Been volatile and will continue to be so given their exposure to guaranteed variable annuities. A lot depends on the equity market. In the short term, the market is slightly overbought so there is a small downside risk. Would buy in the mid to high teens. Prefers Industrial Alliance (IAG-T) or Great West Life (GWO-T).
insurance
COMMENT
Would be most cautious with this given their US exposure. Continue to have significant exposure to structured investment vehicles. Exposure to commercial real estate in the US. Would be cautious on Canadian banks in general. If you own banks, consider taking some money off the table.
banks
DON'T BUY
In the past 5 years they have been a very active acquirer. His concern is their fairly high debt level. Depleting reserves by about 40,000 barrels per day and to replace will be expensive.
oil / gas
BUY
In the short term demand for fertilizers has been very weak but expect renewed demands for them come fall. Good long-term stock. A cheaper alternative would be Mosaic (MOS-N) and potentially provides a little more upside.
integrated mines
COMMENT
Cdn$: Has moved up because of the flow away from the US$ and US index has dropped substantially. Also renewed strength in the commodity sector has been a factor. Expect to see continued strength for the next while and at some point will hit parity once again.
Unknown
TOP PICK
Continues to have very good business momentum. In the latest quarter they sold 3.9 million Blackberries and the estimate was only 3.3 million. Have 19.5% share of the smart phone market and growing. Guidance that margins will be growing.
electrical / electronic
TOP PICK
Excellent momentum. Sold 11 million iPods last quarter with 9 million as the estimate. Also sold 3.9 million iPhones with the estimate at 3.35 million.
electrical / electronic
TOP PICK
Specialty potash/fertilizer products company that is based out of China. Have 4 facilities in China now with three facilities under construction. Trading at about 8.5X earnings. Debt-free. Excellent play on both agricultural markets and the growing China market.
other services
BUY on WEAKNESS
Very well run business. Likes the surety of their cash flows. Decent growth possibilities in this. Very handsome yield.
oil pipelines
COMMENT
Will be volatile given their exposure to guaranteed variable annuities. In the last quarter issued a preferred share that supports their balance sheet. Had partial ownership of CI Financial that they sold so they are very well capitalized. Long-term hold but in the short term, will be impacted by any weakness in the market.
insurance
COMMENT
Thinks market sentiment has changed from a month ago. There has been some optimism that investors can grasp. Economic data has stabilized. It will be a ‘W’ shaped recovery, rather than a ‘V’ shaped. Look for areas that will see a more sustainable rally. Look at stocks with good balance sheets and without a need to raise capital. This wont be a smooth ride forward.
Unknown
COMMENT
With Bear ETFs there is the potential slippage in value due to the leverage.
investment companies / funds
WAIT
Good outlook; embarking on an ambitious capital program to expand pipelines. There will be an earnings drag due to financing needs short term. You are paid to wait (5% dividend) for the long term.
oil / gas pipelines
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