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Stock Opinions by Paul Taylor

N/A

Markets. He hopes the US is growing and turning the corner. At the end of the day what is important to him is job growth, other than the recent blip. He believes the second half of 2015 will see more economic gains and consumer spending. He hopes for 2.5% growth. The Euro zone is exhibiting a bit of momentum and is turning the corner. They have weak oil prices, the currency and the Greek situation. Growth may be 1.5 to 2%. Japan is the wild card. There are still some structural issues, but there are numerous things that bode well: currency, oil prices, and corporate governance reform. In Canada he thinks better prospects are outside of Canada because of oil and the extended consumer. The Canadian consumer is more stretched than the US consumer.

Unknown
DON'T BUY

The ‘C’ series is the key thing for the organization. There are cost overruns and they are behind schedule and then there is the order book. Business jets are still an improving environment. It is a big capital expenditure for little revenue. In rails there are specific projects, particularly in France, but overall there are a lot of question marks. You have to watch the ‘C’ series and the drain in resources.

transportation equip & components
N/A

Exposure to banks Where we are, he is procyclical, and the financials kind of fit in there. They are a pretty good place to be for income. He likes the banks with international exposure. In terms of insurance companies, you can pursue MFC-T for non-Canadian exposure in the US and Asia. It is significant. You get benefits with insurance in a rising rate environment. You give up a bit of yield with insurance.

Unknown
COMMENT

Wonderful proprietary technology. Explosive growth. If they hit a speed bump that could be challenging. It is pretty widely owned and followed.

INDUSTRIAL PRODUCTS
COMMENT

Tied to the vagaries of the Canadian housing market. It is highly regional. It is well run. There has been a big short position on this one. A lot of it he argues is ill-informed US investors who believe the Canadian housing market is in bubble territory. He believes we will soft land in real estate in Canada and this won’t affect HCG-T much.

investment companies / funds
COMMENT

Gold. It works in one of two extremes. It won’t work in the middle ground that we are in now. There is no inflation.

Unknown
PAST TOP PICK

(Top Pick May 16/14, Up 25.95%) A leader in the property and casualty business. Growing through acquisition and using its scale. They just bought some business from Canadian Western Bank. They are a leader in a growing business space.

insurance
PAST TOP PICK

(Top Pick May 16/14, Up 10.29%) The space is appealing. They had a big backlog of infrastructure planning. They project manage things from soup to nuts. They are diversified by industries and by geography. They are a little constrained by the oil and gas space as they all are. He thinks they would be a buyer in consolidation activities. They won’t get bought.

consulting
PAST TOP PICK

(Top Pick May 16/14, Down 45.14%) Solid management team, good assets and a potential to grow production. They should double production between 2015 to 2016.

oil / gas
BUY

It had a run. More people have lost money in US airline stocks than any other sector. This has gone from a turnaround into potentially a sustainable growth story. They have pensions under control, out of a deficit, and they have their investment in Rouge Airline. The other big win is international traffic. He believes their earnings are sustainable. The story is more compelling that for WJA-T.

Transportation
WEAK BUY

It is a very credible management team. Energy may not be where you want to fish right now, but this one is good if your outlook is 3 to 5 years. This will be one of those survivors in the energy patch.

oil / gas
BUY

The dividend is well covered. It is a stellar dividend growth story. There is a headwind from Western Canada, but there is also the service revenue from the equipment in the oil patch.

wholesale distributors
BUY

They have turned a corner in terms of management. It has been de-risked. This has the juiciest yield. They have to compensate investors because the growth is not there because of them having no international exposure. It is a good place to be as we go forward.

banks
DON'T BUY

He feels interest sensitives are not where you want to be. These are the ultimate interest sensitive vehicles. Unless you want to hold it for a very long time, don’t go into it.

investment companies / funds
BUY

He likes the rails. They had a bit of a pullback. It is in reaction to the weak Q1. Canadian banks are trading at a premium to their US peers. He thinks the North American economy is strong and this bodes well for rails. Crude by rail will continue. Even though they are pricey, he thinks this is a good place to be.

Transportation
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