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Stock Opinions by Stephen Takacsy, B. Eng, MBA

COMMENT
There are signs that the worst of inflation may be over and that the central banks may be slowing rate hikes to see what their impact has been so far. However there may still be more rate hikes. We should see prices start to stabilize. Investor sentiment is the most negative since the financial crisis. Markets can turn very quickly so stay fully invested. He has seen very safe sectors have a major sell-off in the last few months - such as telcos, pipelines and utilities. This provides good valuations and many opportunities. Also opportunities with small and mid cap companies that have been thrown out with the bathwater.
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BUY
Its main business is e-procurement and it had a big meltdown along with the tech rout. It is not only an e-commerce platform for large corporations but has several smaller businesses as well. It is trading well below the sum of its parts. It had a good offer for a very small division which would give it $67 million, basically its present market cap so it could pay off debt, have a net cash position and still keep its two main businesses. It is focused on improving profitability, EBITA and margins. There is lots of upside, maybe $6 or $7 in 12 to 18 months and $14 in the next five years.
computer software / processing
COMMENT
He is not a fan of airlines. The recent results were very good but it can be very volatile. It is fairly priced and he prefers to own debt. The government has a stake in it.
Transportation
Unspecified
It is a valve maker where the end markets have great importance, especially energy and nuclear. Has a strong backlog. He is one of the activists pushing hard for the company to sell to a strategic partner for better profitability. Has a new CEO who is doing very well. Trading well below liquidation value.
INDUSTRIAL PRODUCTS
Unspecified
They are leaders in wireless antenna but have had trouble with supply chain issues during the pandemic. Also there has been a slowdown in cell phone sales especially with Samsung, the largest customer. Other parts of the business are doing really well and there is a record backlog. Now focused on profitability and the market is looking for a turn-a-round in the bottom line over the next year.
0
COMMENT
Now more reasonably priced. He prefers pure plays like Brookfield Infrastructure.
management / diversified
BUY
He has been buying since it is very well priced and a great opportunity. Three players control the market. Margins are down a little bit in the last few quarters but contracts are now being renewed at much better prices. Low Capex and strong cash flow.
INDUSTRIAL PRODUCTS
COMMENT
Not that familiar with the company but is with the industry. Prefers WSP and Stantec for global infrastructure rather than engineering construction.
contractors
PAST TOP PICK
(A Top Pick Nov 09/21, Down 68%) It is a high quality company and one of the world leaders in cloud based learning. It went down with tech and is trading at a significant discount to its peers. Has some impressive contracts but has reduced growth guidance. Looking for a positive EBITA much sooner than before. 0,7 X Sales.
0
PAST TOP PICK
(A Top Pick Nov 09/21, Down 51%) The largest provider of pharmaceutical services in Canada. Growing organically and by acquisition. Has higher labour costs - margins should be compressed short term but not longer term. Good management.
Healthcare
PAST TOP PICK
(A Top Pick Nov 09/21, Up 18%) One of his favourites and should have record results. Has been on M&A binge for 10 years. The new CEO is focused on cost integration, sales synergies and debt reduction. Very cheap and a safe way to play agriculture.
machinery
Unspecified
A great business along with Enbridge and others. Dividend is safe and grows year after year. Has a big project in Mexico so there has been overhanging fear of a large equity issue. It did have an equity issue months ago but says it will not use equity again for any more funding if needed.
oil / gas pipelines
COMMENT
Sector very vulnerable to rising rates. For a multi-residential Minto type REIT, the cap rates don't reflect interest rates. Not trading at bargain levels.
REAL ESTATE
Unspecified
It has been a tough market for small cap companies. Has had higher input costs and challenges with the restaurant and hospitality industry being shut down for part of the pandemic. A well managed and quality company that trades cheaply. It will take a while for margins to improve so could sell for a tax loss and buy back later.
breweries / beverages
BUY
Has had the same issues as Andrew Peller. He still holds - just under 10%. It is in the middle of a convertible debenture to help them grow and make more acquisitions. Has a very good new CEO, a veteran in the industry and focused on operations and increasing the top line and margins. It is well positioned.
0
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