Opinions by Darren Sissons | StockChase
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Darren Sissons

Vice President and Partner

ON STOCKCHASE SINCE Jan 2012

Campbell Lee & Ross


Opinions by Darren Sissons


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2017-10-13

N/A
A Comment -- General Comments From an Expert 

Market. Markets have become politicized where we have seen changes of government in most countries. Everyone is starting to see their populism moving into the markets. In Canada we have the impact of the proposed tax reforms, which is not being received well by a lot of people. Those kinds of dynamics are occurring across the globe. Quantitative easing has definitely helped markets across the globe move to high levels.

Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $0.020
Owned: _N/A

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2017-10-13

COMMENT
A Comment -- General Comments From an Expert 

What US bank do you prefer? Under Obama, the banks that made sense were the regional banks, because the regulatory glare was very onerous. Under Trump, that has kind of softened, and we are under a rising interest rate environment. Some of the US money centred banks make sense. He owns the BB&T (BBT-N) on the regional side. He also owns Bank of America (BAC-N) which just announced very good results.

Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $0.020
Owned: Unknown

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2017-10-13

COMMENT
Alibaba Group Holding (BABA-N)

This is a play on the underlying social media, logistics, delivery. In terms of the Chinese economy, it has a highly dense population, and if you want to deliver products, you just can’t go to the big box stores, so you get a delivery price which comes with the Ali Baba story. The valuation is very steep, and if it were a little lower he would potentially take a position. A very binary story as far as valuations go, but he recognizes it as a quality company.

Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $178.450
Owned: No

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2017-10-13

DON'T BUY
Blackstone Group LP (BX-N)

Private equity works by you having to put capital in, but after a period of time, they have to give it back. A lot of money owned by companies like this, can effectively be under risk of having to return it. If they can’t raise additional capital, their sustainability longer-term of the dividend, is somewhat in question. The 2nd issue is that you have a business that really makes all its money by buying when there is a recession and selling when there are frothy markets. At this point, we have very frothy markets. Anything that needs to be sold probably has been sold, and moving forward, the likelihood of performance improving may be modified lower. This is a kind of company you want to buy during a recession.

investment companies/funds
Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $32.930
Owned: Unknown

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2017-10-13

COMMENT
Cisco (CSCO-Q)

This did very, very well when we had the big expansion of fibre globally. Since then, they really haven’t done a whole lot. Huawei has come out of China, and has become a very painful competitor for them. Basically, Cisco just serves the US and some other markets to a lesser degree. He sees it as a challenged story, and it has to figure out where the next growth path is. The 3.5% dividend is safe, but he doesn’t see a ton of upside here.

electrical/electronic
Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $33.470
Owned: Unknown

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2017-10-13

PAST TOP PICK
CSX Corp (CSX-Q)

(A Top Pick Jan 27/17. Up 12%.) This is a Hunter Harrison story. He is turning the company around. The unions and clients were getting unhappy, and if he works his magic as he has done in the past, we should see continued upside from here. Still a Buy.

Transportation
Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $52.830
Owned: Yes

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2017-10-13

COMMENT
CVS Health Corp (CVS-N)

In many cases this is a Trump Administration story. Drug stocks have come off significantly, along with the companies that sell drugs to the American consumer. There has been a recovery in a lot of the drug stocks, and he’s not 100% convinced that Americans want to give up Obamacare. Ultimately, this is a story of drug price inflation and the attempts of the government to rein costs in. Longer-term, it is an interesting story, but a very thin margin business. If you get a small drop in profitability, stocks tend to come back significantly. This may be a buying opportunity, but for him the margins are a little skinny and not on his radar.

specialty stores
Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $72.600
Owned: No

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2017-10-13

TOP PICK
HSBC Holdings P L C (HSBC-N)

Thinks it has a discount from BREXIT on it, but is very exposed to Asia, which is a real growth driver. Its key market is based in Hong Kong, which is pegged to the US$, giving US leverage on the interest rate rise. It has a China credit card business, which is new, because China is a closed credit card market. Has a very attractive dividend. It will benefit from rising interest rates as Net Interest Margin, a critical driver of buying profitability, will need to rise by 70% to reach pre- crisis levels. (Analysts’ price target is $41.22.)

banks
Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $49.230
Owned: Yes

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2017-10-13

TOP PICK
Infosys Technologies Ltd. (INFY-N)

An IT outsourcing company. When Mr. Trump got into power, the first thing he did was to bash all the foreigners, and a lot of the stocks, plus some of the tech stocks, were heavily reliant on this sector. Historically, it has had a very, very strong record of growing earnings something like 20% for 15 years. Very, very strong balance sheet. On Nov 1, they come into a $2 billion share buyback. Dividend yield of 2.7%. (Analysts’ price target is $15.50.)

computer software/processing
Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $14.710
Owned: Yes

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2017-10-13

COMMENT
Intel (INTC-Q)

A company in transition. They did very, very well on the back of the desktop. As desktops became more pervasive, the stock ran up, but the world moved to a more mobile environment, and their ability to take a portion of that revenue has slowed. Great balance sheet and great story, but it is going to go through a transition into an environment where its chips aren’t as expensive. The longer-term story is of much smaller growth. He is a net seller of the semi space at this point. He would suggest Analog Devices (ADI-Q), on a market pullback.

electrical/electronic
Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $39.670
Owned: Unknown

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2017-10-13

TOP PICK
Kone Oyj (KNEBV-HEL)

A global elevator company. The dividend has risen substantially. In the last couple of years, it has been relatively dead money, but now we are starting to see an expansion of the global economy, so he expects it to start to move again. Cash reserves exceed all liabilities by a considerable margin. A good growth stock on urbanization. Countries like China and India need more elevators, and this company has the market share in both countries. Dividend yield of 3.4%. (Analysts’ price target is €44.00.)

Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $0.010
Owned: Yes

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2017-10-13

COMMENT
Kinaxis Inc (KXS-T)

This has taken a big tumble. A couple of months ago they announced the loss of a big client. This is the problem with high risk stocks. When you buy a very high valuation company that really has only one major product line, it can correct very severely because of something happening. The stock needs to be much lower before it would be attractive to him.

Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $71.170
Owned: No

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2017-10-13

COMMENT
Lloyds TSB Group PLC (LYG-N)

The overriding issue for them is that it is very much a UK centric story. In the context of a BREXIT, there is likely to be some downside on GDP growth for the UK economy, maybe 5% per year for 4 or 5 years until everything normalizes. Thereafter, there might be some growth. In the interim, you will likely see higher interest rates for banks, but you will see contracting earnings opportunities. You want to look at banks that have UK exposure, but also outside growth. He would suggest looking at HSBC Holdings (HSBC-N) or Banco Santander (SAN-N).

banks
Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $3.580
Owned: Unknown

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2017-10-13

COMMENT
Nintendo Company Ltd. (NTDOY.PK-OTC)

Just looked at the results fairly recently in Cdn$ terms, and there is just no rhyme nor reason with what is going on. Some years it is huge profitability and other years it is big losses. He can get no fundamental comfort in terms of its performance. It has good cash reserves, so the dividend is probably safe.

entertainment services
Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $0.010
Owned: No

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2017-10-13

PAST TOP PICK
Novo-Nordisk (NVO-N)

(A Top Pick Jan 27/17. Up 37%.) It helps diabetes and is the #1 diabetes company globally. They’ve added an $800 million buyback, which will be completed by the end of October. They’ve also had a number of interesting announcements on the pipeline side. Good strong balance sheet.

biotechnology/pharmaceutical
Darren Sissons

Vice President and Partner, Campbell Lee & Ross

Price: $47.530
Owned: Yes

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