Opinions by Barry Schwartz | StockChase
1827
Barry Schwartz

CIO & Portfolio Manager

ON STOCKCHASE SINCE Sep 2009

Baskin Wealth Management

1827
Barry Schwartz

CIO & Portfolio Manager

ON STOCKCHASE SINCE Sep 2009

Baskin Wealth Management


Opinions by Barry Schwartz


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General Market Comment 

November 27, 2017

Market. The market is expensive, but the most important thing when you are a long-term investor is interest rates. You have to think about what you can invest in with your long-term capital. Should it be real estate, GICs, Bitcoin, etc.? You look at the cash flows to determine what your best option is to deliver the best returns over the long run. He tends to be conservative, so for his clients he sticks to stocks and bonds. Bonds are guaranteeing 2.5% at most over the next 5 years, so it is not the best alternative. If rates stay low for the next 10 years, you’ll kick yourself for not owning stocks. He expects to see record corporate profits in 2017, and in 2018 the market is expecting good corporate profits. If so that would help justify the market valuations. The PE ratios on the S&P 500 are higher than they’ve been in a long time, but are nowhere near as high as they were in the late 90s and early 2000. To see what is going to happen in the future, you have to use comparative analysis. Central banks want an improving economy, but their mandates are to fight inflation. We have no inflation, and thinks that part of the blame has to do with Amazon (AMZN-Q). When Amazon says it is going to cut prices, everybody has to follow suit. Amazon doesn’t care about profits, they care about benefiting the consumer, which means lower prices.

Market. The market is expensive, but the most important thing when you are a long-term investor is interest rates. You have to think about what you can invest in with your long-term capital. Should it be real estate, GICs, Bitcoin, etc.? You look at the cash flows to determine what your best option is to deliver the best returns over the long run. He tends to be conservative, so for his clients he sticks to stocks and bonds. Bonds are guaranteeing 2.5% at most over the next 5 years, so it is not the best alternative. If rates stay low for the next 10 years, you’ll kick yourself for not owning stocks. He expects to see record corporate profits in 2017, and in 2018 the market is expecting good corporate profits. If so that would help justify the market valuations. The PE ratios on the S&P 500 are higher than they’ve been in a long time, but are nowhere near as high as they were in the late 90s and early 2000. To see what is going to happen in the future, you have to use comparative analysis. Central banks want an improving economy, but their mandates are to fight inflation. We have no inflation, and thinks that part of the blame has to do with Amazon (AMZN-Q). When Amazon says it is going to cut prices, everybody has to follow suit. Amazon doesn’t care about profits, they care about benefiting the consumer, which means lower prices.

Unknown
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$0.020
Owned Owned
_N/A

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COMMENT
Altagas Ltd(ALA-T) 

November 27, 2017

This has fantastic dividends, and similar companies have increased dividends year after year. They’re working on a lot of projects. Interest rates bumped up a little, which hurts their multiples. With oil prices being depressed, people are not sure if some of their big projects will go forward. There is room in your portfolio for one or 2 of these types of utilities. However, don’t fill your portfolio with all interest rate sensitive stocks. If you are wrong, and interest rates start to move, you don’t want to be caught. Dividend yield of about 7.5%.

oil/gas

This has fantastic dividends, and similar companies have increased dividends year after year. They’re working on a lot of projects. Interest rates bumped up a little, which hurts their multiples. With oil prices being depressed, people are not sure if some of their big projects will go forward. There is room in your portfolio for one or 2 of these types of utilities. However, don’t fill your portfolio with all interest rate sensitive stocks. If you are wrong, and interest rates start to move, you don’t want to be caught. Dividend yield of about 7.5%.

oil/gas
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$29.330
Owned Owned
Unknown

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TOP PICK
Blackrock Inc.(BLK-N) 

November 27, 2017

Thinks this is the world’s largest asset manager. They own iShares ETF’s, which is the biggest seller having 50% of market share. What excites him about this company is their 3 trillion of ETF’s. There are 16 trillion of mutual funds. Mutual funds have 2%-2.5% fees where you can buy an ETF very inexpensively. More fund managers, more retail investors and Robo advisors are going to be using ETF’s more and more. The company sells a software program that helps financial advisors allocate their portfolios into assets. Dividend yield of 2.1%. (Analysts’ price target is $515.00)

Financial Services

Thinks this is the world’s largest asset manager. They own iShares ETF’s, which is the biggest seller having 50% of market share. What excites him about this company is their 3 trillion of ETF’s. There are 16 trillion of mutual funds. Mutual funds have 2%-2.5% fees where you can buy an ETF very inexpensively. More fund managers, more retail investors and Robo advisors are going to be using ETF’s more and more. The company sells a software program that helps financial advisors allocate their portfolios into assets. Dividend yield of 2.1%. (Analysts’ price target is $515.00)

Financial Services
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$481.960
Owned Owned
Yes

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COMMENT
Cineplex Inc(CGX-T) 

November 27, 2017

2015-2016 were the best years for the box office. Attendance at movies has been sliding since 1980. However, this company has been able to raise concession prices by 60% since 2005. They’ve also been able to raise ticket pricing. They are miles ahead of the competition. Their goal is to generate two thirds of EBITDA from non-movie related activities over the next 5 years. The month of November looks to be amazing. Dividend yield of 4.5%.

other services

2015-2016 were the best years for the box office. Attendance at movies has been sliding since 1980. However, this company has been able to raise concession prices by 60% since 2005. They’ve also been able to raise ticket pricing. They are miles ahead of the competition. Their goal is to generate two thirds of EBITDA from non-movie related activities over the next 5 years. The month of November looks to be amazing. Dividend yield of 4.5%.

other services
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$36.910
Owned Owned
Yes

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TOP PICK
EnerCare Inc(ECI-T) 

November 27, 2017

He likes the cash flow they get from the hot water business to get into smart meters and HVAC service sales and rental in North America. The average age of the air-conditioner in the US is 10 years old, and there are some new standards that are coming in. Meanwhile there are about 50,000 mom-and-pop HVAC service companies in the US. There is a big opportunity to acquire them. This is trading at 10 or 11 times EBITDA, and they can make acquisitions at 4 or 5 times EBITDA. Then they just rinse and repeat. Millennial’s are going to need a lot of houses. Dividend yield of 4.8%. (Analysts’ price target is $24.00)

Consumer Products

He likes the cash flow they get from the hot water business to get into smart meters and HVAC service sales and rental in North America. The average age of the air-conditioner in the US is 10 years old, and there are some new standards that are coming in. Meanwhile there are about 50,000 mom-and-pop HVAC service companies in the US. There is a big opportunity to acquire them. This is trading at 10 or 11 times EBITDA, and they can make acquisitions at 4 or 5 times EBITDA. Then they just rinse and repeat. Millennial’s are going to need a lot of houses. Dividend yield of 4.8%. (Analysts’ price target is $24.00)

Consumer Products
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$19.690
Owned Owned
Yes

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BUY
Facebook(FB-Q) 

November 27, 2017

You have to look at the future when buying this company today. It isn’t cheap on earnings, but he doesn’t know any company that has perfect balance sheets like this has. Growing revenues and earnings by 40% per year. They are thinking multitudes in different lines and operations, and he is excited to see what this does. It’s the world’s greatest network. The acquisition of Instagram is now paying off dramatically. This has a place in your portfolio. You may even want to own Google (GOOGL-Q) at the same time.

You have to look at the future when buying this company today. It isn’t cheap on earnings, but he doesn’t know any company that has perfect balance sheets like this has. Growing revenues and earnings by 40% per year. They are thinking multitudes in different lines and operations, and he is excited to see what this does. It’s the world’s greatest network. The acquisition of Instagram is now paying off dramatically. This has a place in your portfolio. You may even want to own Google (GOOGL-Q) at the same time.

0
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$183.030
Owned Owned
Unknown

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COMMENT
General Electric(GE-N) 

November 27, 2017

It is shocking how terrible this company has been for shareholders. The balance sheet has always confounded him and the growth wasn’t there. They have some amazing businesses and should be making a ton of money on their aerospace division. Expects that over the next several years there will be a break up of this company with a spin out of different companies. It is extremely hard to analyse.

electrical/electronic

It is shocking how terrible this company has been for shareholders. The balance sheet has always confounded him and the growth wasn’t there. They have some amazing businesses and should be making a ton of money on their aerospace division. Expects that over the next several years there will be a break up of this company with a spin out of different companies. It is extremely hard to analyse.

electrical/electronic
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$18.120
Owned Owned
No

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COMMENT
Alphabet Inc. (A)(GOOGL-Q) 

November 27, 2017

One of the best companies in the world. The stock has moved up phenomenally, but is still reasonable value given all the properties they have. He is very excited about the potential of the Cloud for this company. There is a lot of opportunity for them.

Business Services

One of the best companies in the world. The stock has moved up phenomenally, but is still reasonable value given all the properties they have. He is very excited about the potential of the Cloud for this company. There is a lot of opportunity for them.

Business Services
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$1072.010
Owned Owned
Unknown

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COMMENT
High Liner Foods(HLF-T) 

November 27, 2017

This company doesn’t fish, it buys seafood and puts value added things to it. They sell to restaurants as well as to consumers. Their big business is selling to restaurants and to hospitality. They feel there is a big opportunity, especially as minimum wage is going up significantly and restaurants are facing increasing labour costs. Since they already have products that are easy to cook and bake, restaurants don’t need fancy chefs, and that’s where they feel they have the value. The stock price has been absolutely terrible, and he thinks a lot of the impact is unwarranted. The CEO who ran the company from 1992 to 2015, is now back, and is thinking 12 quarters ahead, not just 2 quarters. The market is punishing the company for things that happened 2 quarters ago, which was a recall of some of its products. There is a serious opportunity here for long-term investors. Dividend yield of 4.2%.

Consumer Products

This company doesn’t fish, it buys seafood and puts value added things to it. They sell to restaurants as well as to consumers. Their big business is selling to restaurants and to hospitality. They feel there is a big opportunity, especially as minimum wage is going up significantly and restaurants are facing increasing labour costs. Since they already have products that are easy to cook and bake, restaurants don’t need fancy chefs, and that’s where they feel they have the value. The stock price has been absolutely terrible, and he thinks a lot of the impact is unwarranted. The CEO who ran the company from 1992 to 2015, is now back, and is thinking 12 quarters ahead, not just 2 quarters. The market is punishing the company for things that happened 2 quarters ago, which was a recall of some of its products. There is a serious opportunity here for long-term investors. Dividend yield of 4.2%.

Consumer Products
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$13.420
Owned Owned
Unknown

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COMMENT

To him, marijuana is an extremely risky industry, and can’t make heads or tails of the valuation of these companies.

E.T.F.'s

To him, marijuana is an extremely risky industry, and can’t make heads or tails of the valuation of these companies.

E.T.F.'s
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$14.800
Owned Owned
No

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PAST TOP PICK
Hardwoods Distribution(HWD-T) 

November 27, 2017

(A Top Pick Dec 20/16. Up 8%.) This sells value added lumber products, mainly in the US, but also in Canada. We are just at batting practice for a housing boom in the US. There are more millennials then there are baby boomers, so this company will benefit, as 60%-70% of their revenues are tied to residential housing.

merchandising/lodging

(A Top Pick Dec 20/16. Up 8%.) This sells value added lumber products, mainly in the US, but also in Canada. We are just at batting practice for a housing boom in the US. There are more millennials then there are baby boomers, so this company will benefit, as 60%-70% of their revenues are tied to residential housing.

merchandising/lodging
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$19.090
Owned Owned
Yes

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DON'T BUY
Loblaw Companies Ltd(L-T) 

November 27, 2017

The grocery business is not a high profit margin business. There is a lot of competition. Grocers are going to have to spend a lot of money improving and getting delivery to the home, because that is where Amazon is heading. Costco is taking a lot of business, and there are more coming to Canada. There is also Walmart which people love. This is a great defensive name if there is a recession coming, but we are in a pretty good economy, and would not be his best idea at the moment.

food stores

The grocery business is not a high profit margin business. There is a lot of competition. Grocers are going to have to spend a lot of money improving and getting delivery to the home, because that is where Amazon is heading. Costco is taking a lot of business, and there are more coming to Canada. There is also Walmart which people love. This is a great defensive name if there is a recession coming, but we are in a pretty good economy, and would not be his best idea at the moment.

food stores
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$68.210
Owned Owned
Unknown

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COMMENT
Microsoft(MSFT-Q) 

November 27, 2017

The 2nd biggest in the Cloud, and are also making a lot of money in selling software. Microsoft 365 Solution is 90% margin for them, and they are transitioning more people to the Cloud. Valuation is quite inexpensive.

computer software/processing

The 2nd biggest in the Cloud, and are also making a lot of money in selling software. Microsoft 365 Solution is 90% margin for them, and they are transitioning more people to the Cloud. Valuation is quite inexpensive.

computer software/processing
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$83.870
Owned Owned
Unknown

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COMMENT

Largest bus manufacturer in North America. PE ratio seems to be about 15X, which is low in today’s standards. Has a big backlog of orders and have opened service centres all over the place. Companies are changing from oil to gas and electric, which is what this company is producing. 

income trust

Largest bus manufacturer in North America. PE ratio seems to be about 15X, which is low in today’s standards. Has a big backlog of orders and have opened service centres all over the place. Companies are changing from oil to gas and electric, which is what this company is producing. 

income trust
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$48.950
Owned Owned
No

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COMMENT

Their plan is to acquire medical office buildings and standardize the rent and leases, get advertising and get parking. It was a Canadian only entity, but then merged with Northwest International, and has become a much bigger REIT. A REIT is fine in your portfolio, but it’s hard to get excited about a company that has to pay out 95% of its cash flow to shareholders. The valuation on all REITs is quite expensive at this time. Yield of almost 7%.

REAL ESTATE

Their plan is to acquire medical office buildings and standardize the rent and leases, get advertising and get parking. It was a Canadian only entity, but then merged with Northwest International, and has become a much bigger REIT. A REIT is fine in your portfolio, but it’s hard to get excited about a company that has to pay out 95% of its cash flow to shareholders. The valuation on all REITs is quite expensive at this time. Yield of almost 7%.

REAL ESTATE
Barry Schwartz

CIO & Portfolio Manager, Baskin Wealth Manage...

PricePrice
$11.610
Owned Owned
No

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