He really likes management. The dividend is safe. This business grows at about GDP. If they are able to create low cost capacity, they may be able to increase their market share slightly, but the free cash flow yield on this is relatively high. To him, the right price is below $20.

Manulife (MFC-T) or Sun Life (SLF-T)? Insurance companies tend to move up and down with interest rates. If you continue to see the interest rates gradually move up, it will be a positive. ROE’s are decent. Both are benefiting from what is happening in Asia. Both companies are fine.

Manulife (MFC-T) or Sun Life (SLF-T)? Insurance companies tend to move up and down with interest rates. If you continue to see the interest rates gradually move up, it will be a positive. ROE’s are decent. Both are benefiting from what is happening in Asia. Both companies are fine.

A Chinese company is offering to acquire this at $20.37. There is still uncertainty. If you own, he would consider selling some of your holdings.

He likes this company. Very well diversified with a very attractive dividend yield. In recent years they’ve increased their US exposure. It is so well diversified that you can bank on pretty moderate but stable cash flow and cash flow growth for the foreseeable future.

If he owned this, he would switch to Pepsi (PEP-N). There is more optionality with Pepsi. Coca-Cola has re-franchised their bottling agreements. The margins are relatively high. Pepsi is not as operationally efficient, which means that it is probably a better acquisition target.

This business is probably a lot simpler than people think. They sell equipment that allows people to connect to the Internet. This can include routers and switches, and for the longest time this was their bread-and-butter. All of a sudden, we had the advent of software defined networks. Software was decoupled from hardware. Cisco sold them together, so they encountered some margin pressures. Now they have transitioned where you are starting to see some positive organic growth, focused on security. Looking forward, the Internet of things is a whole bunch of different devices connected to the Internet. That’s a lot of data flowing across the networks, which should benefit companies like this. Trading at 12X earnings. Dividend yield of 3%. (Analysts’ price target is $39.)

Valuation is pretty decent, and actually trades at a discount to its US peer group. It is a large player in Canada. Ultimately it should continue to benefit by growing in the US. Has a very decent free cash flow yield. Has a very predictable reoccurring revenue model that will support its earnings growth. (Analysts’ price target is $24.)

Manufactures sensors mostly. Their biggest market is automotive and is starting to get into non-automotive industries and sectors. They will benefit from the Internet of Things as devices become connected with smarter devices that are aware of what is going on. Trading at about 14X earnings. It should demonstrate relatively low organic sales growth, but has great margins and a relatively dominant position. (Analysts’ price target is $53.)

Central Banks.They are forward-looking, so monetary policy to some extent is forward-looking, considering that a lot of Central Banks in the US have hiked rates 3 times since Trump won the presidency. In Canada, the Bank of Canada has hiked rates twice, so we are forward-looking, because inflation isn’t quite at the target a lot of these Central Banks are targeting, which is 2% or below. They think the slack is eventually going to get absorbed and eventually move back up to 2%. Having fixed income in a portfolio is important, because it will act as a ballast and give you an opportunity to redeploy capital when an opportunity presents itself. As long as we have decent credit growth and decent economic growth, it bodes well for owning equities, corporate profits and earnings.

Hold or Sell?If you are holding it, you are buying it. There is no question there is a tremendous amount of growth ahead. It’s very hard to justify valuation. While he has confidence that e-commerce penetration is going to increase very gradually from 9%-10% in the US, when you look at their valuation it is difficult to justify how much earnings are going to have to grow for the valuation to come down to a market multiple. Trades at about 110X next year’s earnings. If you take that market multiple and bring it down to a multiple of about 20, that implies earnings are going to have to grow at a compound annual growth rate of 48% over 10 years. Very few companies have been able to do that.

Key factors you focus on when assessing this kind of company?He tries to look at management, assets, payout ratios and liabilities. When evaluating any REIT, the most important thing is going to be demand and supply. It really affects the ability of management teams to increase occupancy and increase rents. For this one, seniors housing is very operationally intensive, and they benefit from being one of the largest players in Canada. Having national presence gives them the opportunity to purchase things a little cheaper, manage properties more effectively and to increase occupancy in case of a decline. He likes this company. There are very favourable demographic tailwinds that will benefit them going forward.

Valuations are a little more compelling in the context of higher consumer and corporate loan growth. There is also more of a capital redeployment story in the US. This bank has the 5^th largest deposit base in North America. That deposit base, which is under leveraged, represents an opportunity for them to significantly increase loan growth. They should benefit from higher interest rates.

Their asset class is one of the more coveted by institutions, because they are a form of lower income housing. Apartments, versus home ownership, is where a lot of people are migrating as people can’t get approval for mortgages. As a result, there has been significant rental growth in the US market, and homeownership continues to be at a multi-decade low. Hopefully that starts to reverse course, but in the interim, there is a lot of momentum for US apartments. Prefers Equity Residential (EQR-N). Dividend yield of 6%.

There was a strategic review by management for potentially selling the company, but nothing came of that. There was some turnover with the CEO. The big issue is when it initially came to the market, it had very significant exposure to Magna (MG-T), which was their largest tenant. However, it had a pristine balance sheet. When you think of the Debt to Growth Book Value, it had approximately 25%, and the theory was that if they increased the leverage and took that Debt to Growth Book Value to 40%, they would have $1 billion to play with, diversify tenant exposure, make acquisitions. However they haven’t done any of that. That is unfortunate, because real estate prices have gone up significantly. It pays a decent dividend of 5%. His concern is that you really do need the leadership in there.