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Stock Opinions by Christine Poole

COMMENT
Earlier in a cycle we see a rise in interest rates, because the economy is doing well. Late in a cycle, the 2- and 10-year yields start to narrow and the yield curve flattens or inverts, and that's when rates become a real headwind. We're now in a re-adjustment period where the high-growth stocks with limited earnings get hit and markets are volatile. Bit it's a healthy shake-out. Near term, inflation will be elevated, but the five-year expectation is 2.6%. So, inflation will trend down. The Fed is managing inflation but doesn't want to kill demand either. Once supply chains return to normal, inflation will decline.
Unknown
DON'T BUY
Well-managed and successful. She prefers a peer company that is investing more in EVs. She will announce this stock later.
transportation equip & components
COMMENT
She owns Dollar Tree instead, because it has multiple price points of products in its store. DOL dominates Canada and has introduced those price points, but has backed off on $5. Inflationary and shipping pressures may impact them, but are handling them well, like packaging items smaller to keep their prices low. She prefers Dollar Tree.
Consumer Products
BUY
Dollarama She owns Dollar Tree instead, because it has multiple price points of products in its stores. DOL dominates Canada and has introduced those price points, but has backed off on $5. Inflationary and shipping pressures may impact them, but are handling them well, like packaging items smaller to keep their prices low. She prefers Dollar Tree.
merchandising / lodging
BUY
A past top pick. She likes their long-term growth outlook because of demographics and penetrating emerging markets where dentistry penetration remains low. Danaher spun out Envista to focus more on healthcare R&D, which has worked out. She sees mid-single-digit top-line growth and margin improvement in NVST.
Healthcare
DON'T BUY
Doesn't follow it closely. It has done well since IPO, but has been hit by rising interest rates. Within the payment space, she prefers Visa for being more global.
Technology
WAIT
She's owned this for many years. It gives emerging market exposure which account for 60% of sales. Their growth has lagged, because the food division is lower growth while Covid has made growth uneven by country. This trades at a discount to Nestle, but offers higher growth. Making an acquisition will raise their debt, which is a concern. She's waiting and seeing as they sell their lower-growth businesses. They could sell their food business. Pays around a 3.7% dividend.
food processing
BUY on WEAKNESS
It has pulled back 10% YTD. It trades at a premium PE given its unique positioning in animal healthcare; it executes very well. She likes this sector. She's been adding shares during this pullback.
Consumer Products
BUY on WEAKNESS
Continues to like it. It's doing well. Buy this only on pullbacks at $170. Likes this space and WSP is well-positioned. Strong balance sheet. They have room to make more strategic buys. They grow organically and through M&A.
Business Services
DON'T BUY
It grows by acquisition globally to expand. High-growth companies have been hit by rising interest rates. She's not interested. There's a lot of future growth baked into this stock. A short report also hurt shares.
0
PAST TOP PICK
(A Top Pick Jan 18/21, Up 15%) It remains a longtime holding, a core income stock that pays 6% which is safe and will increase annually through 2025. A capital plan will support that. They will build transmission lines to renewable energy sources and help de0carbonize their fleet. She'd buy it for income.
electrical utilities
PAST TOP PICK
(A Top Pick Jan 18/21, Up 34%) It has pulled back low enough that you can enter it. She likes home improvement long term; it's Amazon-proof. Higher rates are scaring the US housing market, but supply remains tight, so it's attractive, supported by household income. US homes are aging, many past 50 years old, some demand for renovations will be strong. Housing turnover remains high. All tailwinds.
specialty stores
PAST TOP PICK
(A Top Pick Jan 18/21, Up 41%) It executes well. You can eneter this pullback. The ratings business is half their revenues, enjoying an oligopoly. Their desktop business is subscription-based. Their deal for IHS Market will close this quarter and open the fixed-income market; they provide data to the bond market, also subs-based. This will raise their recurring revenue stream from 70% to 76%. They're in high-margin businesses.
publishing / printing
DON'T BUY
She owns no energy producers. CPG has benefited the past year from rising oil prices. But over five years, you're down double digits. This year, it'll depend on oil prices. If you think oil prices will go a lot higher, so will CPG, but she can't forecast oil. Though, she doesn't see a huge rise.
oil / gas
BUY
The whole sector hasn't done well in the past year. But this current pullback is an opportunity. NPI is a leader in offshore wind energy. She owns other names in green energy. This is a decent investment, though.
Utilities
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