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Stock Opinions by Christine Poole

Gold. Stock price moves as the underlying commodity moves. Gold has pulled back, and the USD should start strengthening, which also works against gold prices. She has no money in the sector right now. She prefers producers with very little political risk.
Good long-term investment. E-commerce spending is starting to gain traction. Benefited from Covid, so future earnings growth may not be as good as other companies.
department stores

During lockdown, at-home consumption benefited, but away-from-home dropped. This should recover with reopening. Overhang is a tax dispute with the IRS. If the case goes against them, it will be a significant one-time hit as well as higher tax rate going forward. She owns MDLZ instead.

food processing

Should do well going forward in their 5 areas: property, infrastructure, credit, renewables, private equity. Will benefit as more institutions allocate funds to the types of alternative assets that BAM holds. Yield is 1.14%. (Analysts’ price target is $66.95)

management / diversified
Hit by the pandemic, but Disney Plus did well through the crisis. Huge content library that they can stream. A reopening play on the parks, plus the new growth path of streaming. Positive future growth prospects. No dividend. (Analysts’ price target is $204.86)
entertainment services
25% of business comes from the US, where capital market activity is quite robust. Stock price has moved, but more to come as the Canadian and US economies open up. Still trades at a reasonable multiple. Eventually dividends and share buybacks will resume. Unused loan reserves strengthen its capital base. Yield is 3.68%. (Analysts’ price target is $123.06)
Bond yields are rising, indicating an improving growth outlook. The pace of this increase caught markets off-guard. The 10-year yield leapt from below 1% when the year started to the current 1.6%. Inflation should pick up in coming months. Currently, inflation remains below the norm at 1.3% core inflation, but inflation is rising because so is consumer demand. Will inflation return to the 2% norm? She expects a steady recovery in earnings. Q4-2020 earnings were up 5% YOY and better than expected. Earnings on the TSX and S&P for 2021 are projected to be higher than 2019--that's a recent surprise. Profit growth is broadening to different sectors. Economies are opening up. The consumer is in good shape as household net worth are at all-time highs. This is good. She sees a rebound in spending, especially in service industries.
It's done incredibly well during the pandemic as e-signatures blossomed. Growth will continue, but that rate may slow this year. Also, the valuation is too high now. It's a growth-momentum name.
A good acquirer, making some good ones in recent years. They will continue to buy but it's getting more difficult because ATD itself is so big now that a purchase makes less impact than before. They tried and failed to pick up France's Carrefour recently. There's some organic growth in existing operations but there's better growth in other names.
food stores
She continues to hold it. The utility space has pulled back (AQN is down 15%) because of rising yields. AQN pays a yield under 4%. Its growth outlook is strong for years to come, and AQN enjoy robust cash flow primarily in the U.S. AQN'S dividend that will rise 10% this year, though that growth may moderate in years to come as AQN invests more in its business. Renewable energy remains a good investment, though the group was overextended coming into 2020; she was waiting for a pullback and it's happened.
electrical utilities
Canadian banks outlook Hang onto your banks, because they're catching up now after a stagnant 2020. Banks will do well when yields rise and the economy improves, which is expected this year with reopenings. We'll have to wait when government support pulls back or ends in the fall. We'll see how self-sustaining the economy will be. The banks have been prudent in their reserves, and have enjoyed fine growth in wealth management and capital markets. Despite a spike in stock prices, the banks remain below historic PE averages, though it should climb over time. Housing bubble risk with sharp rises in home prices? In Canada, we see this headline every few years. The banks' loan-to-value ratios are resilient. Also, consumers have decreased credit card spending and are taking on more mortgages given very low interest rates. Third, employment will improve in Canada and will boost household income.
Sell this and buy a Canadian bank? It's lagged. it's a long-term investment play managed by Prem Watsa. It could take many years for some of his investments to play out. Transparency may not be that clear in some investments. It's trading below NAV. It could take a few years for the stock price to recover. Yes, buy a Canadian bank or lifeco which will benefit from the reopening.

They paid a high price for Slack. She owns MSFT instead of CRM. It comes down to valuation, so if CRM's PE falls, it may be worth owning. Buy a MSFT instead.

computer software / processing
One of the lowest-cost producers in the Alberta oil sands. They'll be e=generating free cash flow with currently high oil prices, but how long will this price last? Air travel should bounce back, but how long will OPEC maintain oil production cuts? She wouldn't be surprised to see soft oil prices later this year, but Suncor is near best in class, has a strong balance sheet and it can grow its production regardless of the oil price.
integrated oils

Rogers offered $40/share, and Shaw is trading at $34 now. She expects concessions with Rogers likely divesting some assets to meet federal regulatory approval, a process that will last for a year or more. Hold Shaw for now, then sell as shares approach $40.

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