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Stock Opinions by Lorne Steinberg

COMMENT
Recession worries vs. market all-time highs?

Absolutely. The economy's been pretty resilient in the face of these higher interest rates. For the first time ever, he listened to J. Powell's conference call yesterday. Despite the headlines that they're not going to cut rates anytime in the next few months, Powell acknowledged that the first rate cut decision will be huge for the markets.

If data stays where it is, we can expect to see rate cuts in the back half of this year almost certainly. So the market's pricing some of that in. If we do get some rate cuts, it's going to give some relief to consumers who are sitting in a lot of debt. Wages are still rising. He thinks the economy will probably escape a recession.

Unknown
COMMENT
Lots of bargains outside US?

Lots of bargains in lots of places. 2024 has started off like 2023, where the tech stocks are driving markets. Outside of that, everything else is treading water. Some of the world's great businesses, both in the US and abroad, are trading at really attractive valuations and offer lots of value because they haven't moved very much in a couple of years.

Unknown
COMMENT
Nassim Taleb: US is in a "death spiral" over government debt.

He's completely wrong. US retains its high credit rating because its tax rate is one of the lowest in the world. If the US ever runs into serious issues, it can raise taxes somewhat. Reality is that the US economy continues to grow, and debt as a percentage of GDP is declining. So he doesn't see any issue there, but it makes for great headlines.

Unknown
COMMENT
Would US ever tacitly resort to inflation to bring down the burden of its debt?

Inflation has already had an impact on debt. The US would have to pass larger spending bills, and that's just about impossible with the Congress they have. There are so many things going on in the background that are out of government control. They spent a ton of money just like everyone else during Covid. Debt to GDP in most countries is on the decline.

Unknown
BUY
Toronto Dominion

Very bullish on Canadian banks in general. Canadian regulators don't care if TD makes more US acquisitions, as long as capital ratios remain in line. US regulators care, however. Widespread regulatory crackdown on money laundering will result in a fine, insignificant in the grand scheme.

banks
WEAK BUY
Gibson Energy

Yield is 7.5%, looks attractive. Debt from last year's large acquisition appears manageable. Utility-type operation, as it pays out about 80% of distributable cashflow. Steady dividend play, not really a grower, more like fixed income. Better value elsewhere with growth for him, but he's not negative on the stock.

pipelines
WATCH
Franco-Nevada Corp.

Phenomenal long-term track record. Outstanding job driving shareholder value. He's looking at it, as the price has come down so much. Foreign assets, like Panama mine, are always a risk.

precious metals
BUY
CVS Health Corp

One of the cheapest stocks he owns, trading less than 10x earnings. Soup to nuts healthcare company. Punished because post-Covid retail sales are down. Sum of parts is worth well north of $100. Core holding.

specialty stores
DON'T BUY

Commodity play, has always been wildly volatile, and he avoids this type. Stock goes up and down with the commodity price. He prefers a more stable cashflow. Getting rid of coal is a net positive. 

Mining
COMMENT
Preferred shares.

Strongly advises investors to avoid rate-reset preferreds. Reason: traded horribly when rates went down, and horribly when rates went up. Relatively illiquid. Not fixed income, not equities. Nothing against BPO, just the preferred shares.

property mngmnt / investment
DON'T BUY
Rate-reset preferred shares.

Strongly advises investors to avoid rate-reset preferreds. Reason: traded horribly when rates went down, and horribly when rates went up. Relatively illiquid. Not fixed income, not equities. Either buy fixed income, where you know what your return will be and the maturity date. Or buy equities and get the growth.

Whole rate reset world has not been great for investors for a number of years. He thinks the whole sector will have less issuance over time.

Unknown
BUY ON WEAKNESS
WSP Global Inc.

Homerun. Incredibly well run. Priced for perfection, don't buy here. If stock fell, he'd certainly take a look. Great Canadian company.

INDUSTRIAL PRODUCTS
BUY ON WEAKNESS
Stella-Jones Inc.

Very simple business, has done well, the only game in town. Stock's done so well, it's too expensive. He'd need to wait for a pullback. 

misc industrial products
DON'T BUY
Enbridge
ENB vs. FTS vs. TRP for income in an RRSP.

Lots of debt, which the company has indicated it's going to reduce, which means slower dividend growth over time. Yield is 7.6%.

FTS is less levered. For a pure income play compared to ENB, he'd choose this one.

His favourite play in the entire sector is TRP. Less levered than ENB. Healthy dividend yield, with more room for growth. More room for growth in general. 

oil / gas pipelines
WEAK BUY
Fortis Inc.
FTS vs. ENB vs. TRP for income in an RRSP.

ENB has lots of debt, which the company has indicated it's going to reduce, which means slower dividend growth over time. Yield is 7.6%.

FTS is less levered. For a pure income play, he'd choose this one over ENB.

His favourite play in the entire sector is TRP. Less levered than ENB. Healthy dividend yield, with more room for growth. More room for growth in general. 

electrical utilities
Showing 1 to 15 of 1,668 entries