Opinions by Lorne Steinberg | StockChase
623
Lorne Steinberg

President & Portfolio Manager

ON STOCKCHASE SINCE Jan 2011

Lorne Steinberg Wealth Management Inc
1000 de la Gauchetiere Street WestSuite 3310Montreal, QUH3B 4W5
T: 514-876-9888 F: 514-876-9994
http://www.steinbergwealth.com

623
Lorne Steinberg

President & Portfolio Manager

ON STOCKCHASE SINCE Jan 2011

Lorne Steinberg Wealth Management Inc
1000 de la Gauchetiere Street WestSuite 3310Montreal, QUH3B 4W5
T: 514-876-9888 F: 514-876-9994
http://www.steinbergwealth.com


Opinions by Lorne Steinberg


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TOP PICK
Futaba Corp(6986-JP) 

November 28, 2017

Touch panel displays and robots. Another one of these great Japanese companies that does not sell to consumers, but sells stuff that goes into manufacturing equipment. Half the share price is in cash and three quarters is in working capital, so you are paying very little for this 70-year old business. Has gone through a transition year with a couple of write-downs in the last couple of years, but returning to profitability now. Thinks the stock is worth double its share price. Dividend yield of 1.2%. (Analysts’ price target is ¥2,200.00.)

Touch panel displays and robots. Another one of these great Japanese companies that does not sell to consumers, but sells stuff that goes into manufacturing equipment. Half the share price is in cash and three quarters is in working capital, so you are paying very little for this 70-year old business. Has gone through a transition year with a couple of write-downs in the last couple of years, but returning to profitability now. Thinks the stock is worth double its share price. Dividend yield of 1.2%. (Analysts’ price target is ¥2,200.00.)

0
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$0.010
Owned Owned
Yes

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PAST TOP PICK
KOA Corporation(6999-JP) 

November 28, 2017

(A Top Pick Aug 8/16. Up 196%.) A great Japanese electronics component manufacturer. They make specific types of electronic components in manufacturing. His target price for this is about 20% higher than where it is today. Still a Buy.

electrical/electronic

(A Top Pick Aug 8/16. Up 196%.) A great Japanese electronics component manufacturer. They make specific types of electronic components in manufacturing. His target price for this is about 20% higher than where it is today. Still a Buy.

electrical/electronic
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$0.000
Owned Owned
Yes

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N/A
General Market Comment 

November 28, 2017

Market. Geographically Japan remains the cheapest of developed markets, and we are finally hearing other investors talking about Japan. Europe also offers good value. There are pockets of value in the US, but it is not a cheap market in general. Heading into a higher rate environment, investors need to be a little cautious. The historical PE of the S&P 500 is 16X earnings, and low interest rates have driven it to about 25X earnings. That’s not to say it can’t go higher, but the Fed is in a rising rate cycle, which implies stocks are going to be less attractive, especially the higher valued shares. In this business, you are either early or you are late. Successful investors are early, so you had better start building up a bit of a cash position or you are going to get caught off side at some point. The whole world is swimming in debt. Consumer government non-bank corporate debt has been going up every year as a percentage of GDP for the last decade. It’s been held together by extremely low interest rates. The fear is that rising interest rates are going to have some impact on government, corporations and consumers. Even if rates move up slowly, we are already seeing slow increases having an impact on Canadian consumers. High-yield bonds are about the only fixed income classes not sensitive to changes in interest rates. In the last 6 rising rate cycles, they actually did well. This is a very short duration asset class. The biggest sensitivity is to default.

Market. Geographically Japan remains the cheapest of developed markets, and we are finally hearing other investors talking about Japan. Europe also offers good value. There are pockets of value in the US, but it is not a cheap market in general. Heading into a higher rate environment, investors need to be a little cautious. The historical PE of the S&P 500 is 16X earnings, and low interest rates have driven it to about 25X earnings. That’s not to say it can’t go higher, but the Fed is in a rising rate cycle, which implies stocks are going to be less attractive, especially the higher valued shares. In this business, you are either early or you are late. Successful investors are early, so you had better start building up a bit of a cash position or you are going to get caught off side at some point. The whole world is swimming in debt. Consumer government non-bank corporate debt has been going up every year as a percentage of GDP for the last decade. It’s been held together by extremely low interest rates. The fear is that rising interest rates are going to have some impact on government, corporations and consumers. Even if rates move up slowly, we are already seeing slow increases having an impact on Canadian consumers. High-yield bonds are about the only fixed income classes not sensitive to changes in interest rates. In the last 6 rising rate cycles, they actually did well. This is a very short duration asset class. The biggest sensitivity is to default.

Unknown
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$0.020
Owned Owned
_N/A

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TOP PICK
Alcoa(AA-N) 

November 28, 2017

Spun off its Arconic unit last year, making it a pure aluminum play again. Aluminum is in the sweet spot of metals, because it is a growth metal. Because it’s a light and strong metal, every new generation of cars and planes uses more aluminum, being more fuel efficient. They have a pristine balance sheet and minimal debt. Throwing off massive free cash flow. After years of suffering through very weak pricing environment for aluminum and alumina, the pricing cycle is starting to turn. A low-cost producer and poised to generate significant earnings growth. Trading at 28.7X trailing 12 months earnings, and he is looking for earnings to double over the next 3 years. As a cyclical company, you have to buy when the PE is high, and sell when the PE is low and it looks like a cheap stock. (Analysts’ price target is $55.)

non-base metal mining

Spun off its Arconic unit last year, making it a pure aluminum play again. Aluminum is in the sweet spot of metals, because it is a growth metal. Because it’s a light and strong metal, every new generation of cars and planes uses more aluminum, being more fuel efficient. They have a pristine balance sheet and minimal debt. Throwing off massive free cash flow. After years of suffering through very weak pricing environment for aluminum and alumina, the pricing cycle is starting to turn. A low-cost producer and poised to generate significant earnings growth. Trading at 28.7X trailing 12 months earnings, and he is looking for earnings to double over the next 3 years. As a cyclical company, you have to buy when the PE is high, and sell when the PE is low and it looks like a cheap stock. (Analysts’ price target is $55.)

non-base metal mining
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$43.300
Owned Owned
Yes

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COMMENT
Apple(AAPL-Q) 

November 28, 2017

An amazing, incredible success story. He doesn’t own this because the iPhone accounts for about 55% of revenues. Samsung (005930-KRX) is spending a ton of money to come up with competing products, as is Google (GOOGL-Q). When you have so much of your company based on a single product with the company priced to perfection, that implies risk so he looks elsewhere.

electrical/electronic

An amazing, incredible success story. He doesn’t own this because the iPhone accounts for about 55% of revenues. Samsung (005930-KRX) is spending a ton of money to come up with competing products, as is Google (GOOGL-Q). When you have so much of your company based on a single product with the company priced to perfection, that implies risk so he looks elsewhere.

electrical/electronic
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$173.070
Owned Owned
No

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BUY on WEAKNESS
Blackstone Group LP(BX-N) 

November 28, 2017

A very well-managed investment group, doing all kinds of different things. He’s a bit concerned about the impact of rising rates on them. Feels the dividend is secure. Higher prices were paid for a lot of their assets, and he wonders how that responds in a higher rising rate environment. Wouldn’t be a buyer here, but would wait for it to be 20% lower before considering it.

investment companies/funds

A very well-managed investment group, doing all kinds of different things. He’s a bit concerned about the impact of rising rates on them. Feels the dividend is secure. Higher prices were paid for a lot of their assets, and he wonders how that responds in a higher rising rate environment. Wouldn’t be a buyer here, but would wait for it to be 20% lower before considering it.

investment companies/funds
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$31.490
Owned Owned
No

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DON'T BUY

December 2021 Bond yielding 4.25%. Buying one high-yield bond is like going to a casino and putting your money on 36 on the roulette wheel. It’s a terrible idea and makes no sense. The company has had to cut its distribution in the last 12 months.

investment companies/funds

December 2021 Bond yielding 4.25%. Buying one high-yield bond is like going to a casino and putting your money on 36 on the roulette wheel. It’s a terrible idea and makes no sense. The company has had to cut its distribution in the last 12 months.

investment companies/funds
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$14.150
Owned Owned
No

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COMMENT
Dollarama Inc.(DOL-T) 

November 28, 2017

Wished he had owned this. Had thought this was only for certain demographics, but the reality is that people of every demographic go to the stores. They are delivering incredible same-store sales growth in a lousy retail environment, because what they sell you wouldn’t buy through Amazon (AMZN-Q). Selling at a hefty valuation, and nothing ever stays cheap forever and nothing ever stays expensive forever.

Consumer Products

Wished he had owned this. Had thought this was only for certain demographics, but the reality is that people of every demographic go to the stores. They are delivering incredible same-store sales growth in a lousy retail environment, because what they sell you wouldn’t buy through Amazon (AMZN-Q). Selling at a hefty valuation, and nothing ever stays cheap forever and nothing ever stays expensive forever.

Consumer Products
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$164.800
Owned Owned
No

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COMMENT
DowDuPont Inc.(DWDP-N) 

November 28, 2017

There is significant upside on this. They will be splitting into several units over the next few years for massive cost savings. Has a huge market share in a number of growing markets, including agriculture, specialty chemicals, etc.

chemicals

There is significant upside on this. They will be splitting into several units over the next few years for massive cost savings. Has a huge market share in a number of growing markets, including agriculture, specialty chemicals, etc.

chemicals
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$71.090
Owned Owned
Yes

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COMMENT
Facebook(FB-Q) 

November 28, 2017

Doesn’t own this, because it always looked expensive, but it is a company that deserved its multiple. It is unbelievable how they keep on driving double digit revenue growth, huge earnings growth and cash flow growth. This is one of those stocks that is priced for perfection.

Doesn’t own this, because it always looked expensive, but it is a company that deserved its multiple. It is unbelievable how they keep on driving double digit revenue growth, huge earnings growth and cash flow growth. This is one of those stocks that is priced for perfection.

0
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$182.420
Owned Owned
No

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COMMENT
Franco-Nevada Corp.(FNV-T) 

November 28, 2017

Fantastic management team. He’s never owned a gold stock. It’s a royalty play, so isn’t subject to massive losses if the price of gold falls, they’ll simply make less money. If someone wants to invest in a gold company, this is probably a top pick.

precious metals

Fantastic management team. He’s never owned a gold stock. It’s a royalty play, so isn’t subject to massive losses if the price of gold falls, they’ll simply make less money. If someone wants to invest in a gold company, this is probably a top pick.

precious metals
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$108.980
Owned Owned
No

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PAST TOP PICK
Goldman Sachs(GS-N) 

November 28, 2017

(A Top Pick Aug 8/16. Up 47%.) All global investment banks are benefiting as interest rates start to rise. This one has done what almost no one else has done, which is not reducing exposure to the riskier trading parts of the business. Their global footprint is almost 2nd to none today. They have good exposure in Europe, whose economy is slowly recovering.

investment companies/funds

(A Top Pick Aug 8/16. Up 47%.) All global investment banks are benefiting as interest rates start to rise. This one has done what almost no one else has done, which is not reducing exposure to the riskier trading parts of the business. Their global footprint is almost 2nd to none today. They have good exposure in Europe, whose economy is slowly recovering.

investment companies/funds
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$239.410
Owned Owned
Yes

Must be logged in to use chart
TOP PICK
ING Groep NV(ING-N) 

November 28, 2017

This is in the Netherlands and Belgium. A pure retail bank which emerged out of the financial crisis in pristine shape. Generating double digit earnings growth. It’s over capitalized in the environment we are in, implying big dividend growth going forward. Selling at maybe 12X earnings. Safe, cheap and a huge beneficiary of a slowly improving European environment. Dividend yield of 4.1%. (Analysts’ price target is $21.60.)

investment companies/funds

This is in the Netherlands and Belgium. A pure retail bank which emerged out of the financial crisis in pristine shape. Generating double digit earnings growth. It’s over capitalized in the environment we are in, implying big dividend growth going forward. Selling at maybe 12X earnings. Safe, cheap and a huge beneficiary of a slowly improving European environment. Dividend yield of 4.1%. (Analysts’ price target is $21.60.)

investment companies/funds
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$18.260
Owned Owned
Yes

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COMMENT
Mosaic Company (The)(MOS-N) 

November 28, 2017

It’s often dangerous to buy commodity stocks when they look cheap, because that often occurs when earnings have reached a peak. This competes with Potash (POT-T), a better managed company with a better group of assets and a stronger balance sheet. To buy any of these companies, you have to be a big believer that potash and fertilizer prices are going to rise.

chemicals

It’s often dangerous to buy commodity stocks when they look cheap, because that often occurs when earnings have reached a peak. This competes with Potash (POT-T), a better managed company with a better group of assets and a stronger balance sheet. To buy any of these companies, you have to be a big believer that potash and fertilizer prices are going to rise.

chemicals
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$24.090
Owned Owned
No

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COMMENT
Pfizer Inc(PFE-N) 

November 28, 2017

With everybody aging, pharmaceuticals should be a place to be. However, they’re all struggling, coming up with new drugs, which are getting more and more expensive to do the R&D for. Cash flow is hurting all of them. They are facing a very tough regulatory environment. The only way this company has been able to grow is to make acquisitions. He struggles with the whole sector.

biotechnology/pharmaceutical

With everybody aging, pharmaceuticals should be a place to be. However, they’re all struggling, coming up with new drugs, which are getting more and more expensive to do the R&D for. Cash flow is hurting all of them. They are facing a very tough regulatory environment. The only way this company has been able to grow is to make acquisitions. He struggles with the whole sector.

biotechnology/pharmaceutical
Lorne Steinberg

President & Portfolio Manager, Lorne Steinberg Weal...

PricePrice
$35.850
Owned Owned
No

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1 Comment

izzyKap

April 25th 2014 at 8:25am

I viewed Lorne for the first time on BNN April 2014. My impression is that he is a thoughtful incisive professional with impressive brain power! I intend to keep track of his recommendations.


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