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Stock Opinions by John Burke

COMMENT

A media company, and the whole sector was kind of turned upside down last year with the story of Netflix (NFLX-Q). Is Netflix going to be the new method of delivering content to consumers? He likes the category, but hasn’t invested in this directly, but likes the idea. There is a good chance this is going to be a winner for you. (One of our viewers pointed out that this company is not a media company. It looks like BNN and the guest got this one wrong. Have no idea what company they were really discussing. Please ignore this comment. Also thanks to Richard for pointing this out. Bill.)

Transportation
DON'T BUY

In addition to this being a late cycle stock, you also have to worry about them being hurt by Internet sales.

department stores
COMMENT

Gold mining stocks? Gold is very difficult to predict. Most gold mining stocks do not pay dividends, and have a lot of debt. If you are going to buy gold, he would do it now. The one thing that would predict whether gold was going to go up or go down is the US$. Gold is a place where central governments turn to when the dollar starts going down. When it goes down, US treasuries also go down, and governments start getting discouraged and start buying gold as an alternative for reserve assets. Doesn’t think either of the US presidential candidates are going to be good for the US$, which is why he would be bullish on gold right now.

Unknown
COMMENT

If he was going to buy a growth stock it would be this one because it is a game changer. The CEO is brilliant and coming up with new ideas on how to keep growing the Amazon brand.

specialty stores
BUY

Down 6% on the earnings they released yesterday. The earnings miss was the 1st since the 2nd quarter since 2011. This has been a really consistent profit generator. The problem now is ESPN, which is responsible for the largest chunk of their earnings. ESPN is typically packaged in these large packages of channels in cable networks, and Netflix (NFLX-Q) has kind of changed that. The earnings for ESPN were not as bad as they looked. It was a bad quarter over quarter comparison, because they lost the college games this quarter versus the same quarter last year. He is buying the stock.

entertainment services
WAIT

All healthcare investors are hurting over the last few months, and this company is part of that. It makes 2 drugs that treat hepatitis, and they are particularly vulnerable to a law that has been proposed in the US. If you are a dual-eligible person, someone who is both Medicare and Medicaid, you are going to start paying the lower of the 2 prices for those drugs. If this happens, it will knock 14% off this company’s earnings. Wait for a cheaper opportunity.

biotechnology / pharmaceutical
DON'T BUY

This owns industrial warehouses and distribution centres, which they rent out to companies. In 2008, the stock fell down to $1-$2 per share, so it is very much a cyclical play. Wouldn’t buy any of the industrial REITs, but would prefer looking at an apartment REIT such as Apartment Investment & Management (AIV-N), which will give you the same kind of returns, with a lot less risk.

investment companies / funds
TOP PICK

Feels media companies are cheap. This is still 20% below where it was in January last year. Expects profits will increase by more than 20% over the next 2 years, at a below market P/E ratio. Dividend yield of 2.17%.

Broadcasting
TOP PICK

His favourite energy pick, because it is over 80% oil. Also, have the best drilling locations in the US, generally in the Permian Basin in West Texas and Southeast New Mexico, which has multiple layers of oil, so with one drilling pad they can get more pockets of oil making it more economical. Dividend yield of 3.91%.

integrated oils
TOP PICK

Gives financial advice to over 10,000 financial advisors. Financial advice stocks have suffered because of new regulations from the Department of Labour, and thinks that is going to help this company to consolidate some of the smaller companies. This is selling over 20% below where it was in 2015. Dividend yield of 3.13%.

food processing
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