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Stock Opinions by Greg Newman

COMMENT
Lessons learned with this week's selloff and recovery? As an investor, you're always learning. Objects resist motion. Traders were all positioned for this number to come down, and people were being too aggressive with that. Inflation is there, it's real, and it will take some time to work through. Even if we did get a positive number yesterday, hinting that inflation wasn't as high, it's still pretty high. The Fed pivot is still pretty far away. Further exacerbated fear. We're going to have to continue to deal with high inflation. Equities now have competition. If you can get 4% in a 2-year, that's pretty attractive, and equities have to contend with that.
Unknown
COMMENT
At what level will GICs start drawing enormous amounts of investor money? GICs are paying 4-4.4% on a 1-year, not bad. But it's all taxable. If inflation is really at 8%, you're still losing money. Bear markets don't last forever, usually 16-20 months, perhaps less. If we're already 9 months into this, and you allocate your money correctly into equities at the right time, you could be looking at a double for a lot of stocks. You want to have some fixed income in your portfolio. That's why they call it the 60/40 portfolio, you want 40% in fixed income. If you can get attractive GICs or other investment-grade fixed income, grab it.
Unknown
COMMENT
Inflation and interest rates. Full-scale velocity inflation that we had in the 70s is a whole different situation. What's somewhat comforting is that this is not the great financial crisis and deflation when the Fed had no idea what to do. There's a script for how to bring down inflation. It hasn't reached wages yet, so it just means the Fed is going to keep going harder until they get the result they want. There's a tradeoff: some pain now with job losses, or real pain later with letting inflation go and end up with a lost decade like the 70s. The whole conversation is about whether they can engineer a soft landing. The trick is to raise rates without doing a lot of job damage.
Unknown
BUY on WEAKNESS
Great company. Solid Q2. They expect 2022 to surpass their usual 6-9% growth target. Inflation-linked revenues. In a recession, they plan to be opportunistic and start buying. At 16x, not expensive given its growth rate of 12.5%. Don't have to rush out today, wait to buy on a dip. Good combo of offense and defense.
Energy Infrastructure, Industrials & Utilities
BUY
For a dividend seeker? Solid name. Trades at 14% discount to NAV. Outperformed CSH.UN on occupancy. Low expectations on the street. Once the market starts to focus on 2024, has good upside. Great name for a nice dividend, plus growth.
other services
COMMENT
Canadian telcos. Great area to be in right now. Roaming has turned positive, they're at 98% pre-pandemic. Immigration play. Very solid numbers on wireless. Good stocks to own in this environment. His favourite right now is BCE.
Unknown
BUY
Great operator. Tentacles into health and tech. A good stock to own in this environment.
telephone utilities
BUY
All over the place, but it's a great opportunity if you can just ignore the noise and buy it. A good stock to own in this environment.
Cable
BUY
Steady eddy with a beautiful dividend, and his favourite at this time. A good stock to own in this environment. Of the big 3, most evolved in fibre to the home, and they did it when rates were low. Maintenance capex will be pretty light. Could be multiple valuation upgrade.
telephone utilities
COMMENT
Put money to work now in the markets? It's always an OK time to invest, and it's always an OK time to invest 9 months into a bear market. The question is will markets get cheaper? It depends on the path of inflation, which has been pretty sticky. Rates will have to go up more, and this will challenge the stock market. NASDAQ is most sensitive to rising rates, so don't buy here. Dow earnings estimates are likely to come down. The better one is the TSX with its exposure to energy and metals, which may be tough for the next 18 months, but really good thereafter. Banks are at reasonable levels. Are they all going to be up 6 months from now? He doesn't know, but doesn't think so. Are they going to be up a year from now? Yes. Two years from now? Most probably. Ask yourself how comfortable are you with position erosion if it doesn't work out immediately?
Unknown
BUY on WEAKNESS
A very sober valuation tech play. Price to growth is very compelling. High growth area. Very well run. Don't chase, pick your spots. Won't be immune to tech weakness. Use the charts. Buy around the 200-day MA. Long-term, a great name.
Technology
HOLD
Balance sheet is great. Cashflow per share growth is 41%. Reasonable valuation. Trading in line, a fine play. He prefers some smaller caps really trading at a discount like VET, ARX, TOU, CPG, and PEY.
oil / gas
COMMENT
Energy patch opportunities. Can't argue with energy companies, still one of the cheapest areas in the market. Still incredible cash cows at WTI $85. He prefers some smaller caps really trading at a discount like VET, ARX, TOU, CPG, and PEY. Many of the energy companies had a near-death experience in 2020, with oil trading so low. They found religion, and this isn't going to change. This new approach favours huge shareholder returns.
Unknown
PAST TOP PICK
(A Top Pick Sep 22/21, Down 44%) Underlying trends are still solid. Trades at 6x. The war in Ukraine, further supply problems, Fed really hiking. Super cheap. Company's buying back shares. You can add on dips, be patient for a 3-5 year horizon. No dividend.
specialty stores
PAST TOP PICK
(A Top Pick Sep 22/21, Down 36%) Stumbled, especially last quarter. Higher costs, staff shortages, supply chain issues. Still compelling on price to growth at 26x 2023 earnings with an anticipated 27% growth rate. Defense areas should stabilize earnings, making it less cyclical. He'll be adding.
transportation equip & components
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