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Stock Opinions by James Thorne

N/A

Markets. We are at a pretty big turning point on economic policy in the US and in Europe. We live in interesting times. Every 80 years the stress in the global economy causes it to start to break. We have a rise in populism in the middle class around the world. People are not happy with chronic slow growth. We have always resorted to war to get rid of excess capacity in the economy. Over production is the catalyst for the oil price. Shale production is here to stay. Low $40s to high $50s is where we will stay. Lots of oil stocks will be value traps, and then there is the possibility of a real estate bubble. Why would you want to invest in Canada? Oil is going to flat line. People will realize that some of these oil stocks are overpriced. It is a big slug to the Canadian economy. He has no Canadian exposure. Investors have to start looking outside of Canada. People probably have an over allocation of resources in their portfolios. People don’t realize the threat there is in real estate.

Unknown
BUY

We are in the early stages of this theme and CSCO-Q is very well positioned. Chinese preference for a North American vendor could be a real benefit to CSCO-Q.

electrical / electronic
COMMENT

The high dividend gives you a unique tax situation. He would rather hold it in a fund so that the fund takes care of it for you. He really likes the company. The yield is slightly over 11%.

investment companies / funds
COMMENT

An interesting play on Netflix. It is a defensive play. He wishes Rogers would put as much money into their infrastructure as VZ-N.

telephone utilities
DON'T BUY

Auto Sector. He does not have a pick. Autos are now your classic value trap. There are issues with inventory as well as financing issues. It is dead money here. He is concerned about the economic growth in China. It is an overcrowded trade. There is no catalyst to get this thing going. The activist investor that wants to split the stock into two classes does not impress him.

Unknown
DON'T BUY

Healthcare. [Should caller hang on?] He typically does not invest in healthcare because it is hard to do fundamental analysis on it. GILD-Q’s block buster drugs are coming off patent. TEVA-N is very cheap, but with health care reform coming on, he is stepping away. Stay away from the sector. The theme of the aging Western demographic has always been there, but he feels there are better opportunities elsewhere.

Unknown
PAST TOP PICK

(Top Pick Feb 27/17, Down 9%) He sold at $13.50. He trimmed that back. He likes the area, but it got too much hype. He is looking to get back in.

Transportation
PAST TOP PICK

(Top Pick Feb 27/17, Down 3%) He is adding to US financials on any pull back. They are in the value creation phase. The Fed will increase interest rates.

banks
PAST TOP PICK

(Top Pick Feb 27/17, Up 27%) He still likes the company and is adding on every pullback. There is going to be a resolution on zero interest rates and austerity. He really likes European banks as well as US Banks. Canadian banks are way too expensive. You should stand back on UK banks because of BREXIT. Greece will be a big beneficiary of all of this.

banks
DON'T BUY

People are thinking there is not another shoe to drop. Canadians are not heading this concern. They should be looking it as a risk. Canadian financials have a massive exposure to real estate and yet policy makers want to drive the prices down. This is a cycle and it WILL pop.

investment companies / funds
BUY

Look at them as flow through shares. It is like a Black Stone. You have to file special documentation with the IRS. He loves the area because if you want to get 3-4% growth in the US, you have to lend to small businesses. The number 3 guy in Trump’s cabinet introduced a law that would allow these companies to increase leverage from 1 times to 2 times. He really likes this space. There is upside to it. But these are special US stocks where you have to file papers with the IRS.

0
BUY on WEAKNESS

He loves it, but it is too expensive for him. They took out the number 2 tower company in India. If we got a pullback it would be one of those companies at the top of his list to add to. When the street loves a stock you should sell it. Then we can get in.

Telecommunications
SELL

This is a company that has missed the boat. The street is questioning the capabilities of the management. Sell and look elsewhere. This company moves so slowly that they buy companies at the wrong time. There are better plays.

electrical / electronic
HOLD

It would be okay as a dividend grower. But these stocks get to a point of saturation so he questions the growth rate. However, it is a safe stock. Do not expect it to appreciate much. The growth phase is over and it is dead money. It will be difficult for this company to grow. The coffee at Tim Horton’s is just as good.

food services
BUY on WEAKNESS

Trump is going to spend a lot on defensive. The guest has a company called Harris instead. But this space is a hold. Add on a pullback. It is a position you should have in your portfolio.

Transportation
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