Opinions by Lorne Zeiler | StockChase
60
Lorne Zeiler

Portfolio Manager & Wealth Advisor

ON STOCKCHASE SINCE Jul 2016

TriDelta Financial

60
Lorne Zeiler

Portfolio Manager & Wealth Advisor

ON STOCKCHASE SINCE Jul 2016

TriDelta Financial


Opinions by Lorne Zeiler


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General Market Comment 

April 20, 2017

Market. The US markets are overvalued, meaning that return expectations should be lower. Earnings were at roughly 115 last year, and are projected at about 132 this year, so we are looking at 18-18.5 on a multiple basis. Other areas are looking more attractive than the US market. People should be looking at Japan and particularly Europe. Europe has had quite a few months now of positive economic surprises. ETF’s would be a good entry for most investors.

Market. The US markets are overvalued, meaning that return expectations should be lower. Earnings were at roughly 115 last year, and are projected at about 132 this year, so we are looking at 18-18.5 on a multiple basis. Other areas are looking more attractive than the US market. People should be looking at Japan and particularly Europe. Europe has had quite a few months now of positive economic surprises. ETF’s would be a good entry for most investors.

Unknown
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$0.020
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_N/A

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N/A
General Market Comment 

April 20, 2017

A stock or ETF for European exposure? If making an entry into a market where you have never been before, an ETF is a good way to do it. You get good diversification across countries and across sectors. Everyone assumes Canadian ETFs are all cheap and are all going to give diversification. That is not necessarily so. He’s been buying into Europe through a US listed ETF. (See Top Picks.)

A stock or ETF for European exposure? If making an entry into a market where you have never been before, an ETF is a good way to do it. You get good diversification across countries and across sectors. Everyone assumes Canadian ETFs are all cheap and are all going to give diversification. That is not necessarily so. He’s been buying into Europe through a US listed ETF. (See Top Picks.)

Unknown
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$0.020
Owned Owned
_N/A

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PAST TOP PICK
Apple(AAPL-Q) 

April 20, 2017

(A Top Pick Dec 23/16. Up 23%.) This has been a great buy. Has reduced his holdings, because the catalysts he was looking for hasn’t happened yet. Two of them were related tax reforms, particularly the possible repeat duration of offshore funds. He is also hearing of delays of iPhone 8. He still likes this. Still at a reasonable valuation.

electrical/electronic

(A Top Pick Dec 23/16. Up 23%.) This has been a great buy. Has reduced his holdings, because the catalysts he was looking for hasn’t happened yet. Two of them were related tax reforms, particularly the possible repeat duration of offshore funds. He is also hearing of delays of iPhone 8. He still likes this. Still at a reasonable valuation.

electrical/electronic
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$142.440
Owned Owned
Yes

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COMMENT

A sector that sold off a few years ago, as people were thinking that with less manufacturing there was less industry. Since then we have had a major change in how people shop. There is a lot of online shopping, and this company’s holdings have become hubs for a lot of storage for businesses. One of the leaders in this space, and probably one of the best names in the industrial space.

property mngmnt/investment

A sector that sold off a few years ago, as people were thinking that with less manufacturing there was less industry. Since then we have had a major change in how people shop. There is a lot of online shopping, and this company’s holdings have become hubs for a lot of storage for businesses. One of the leaders in this space, and probably one of the best names in the industrial space.

property mngmnt/investment
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$6.560
Owned Owned
Unknown

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PAST TOP PICK
AbbVie Inc.(ABBV-N) 

April 20, 2017

(A Top Pick Dec 23/16. Up 4%.) A one trick pony with their drug Humira. Valuation is quite reasonable and is going to be 12-13X projected earnings. A lot of that is based on sales of Humira, a life altering drug, which accounts for over 60% of their revenues. Made 2 very large acquisitions in the past few years, and we are starting to see some of those drugs in the pipeline getting approved.

(A Top Pick Dec 23/16. Up 4%.) A one trick pony with their drug Humira. Valuation is quite reasonable and is going to be 12-13X projected earnings. A lot of that is based on sales of Humira, a life altering drug, which accounts for over 60% of their revenues. Made 2 very large acquisitions in the past few years, and we are starting to see some of those drugs in the pipeline getting approved.

0
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$63.780
Owned Owned
Yes

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BUY
Bank of America(BAC-N) 

April 20, 2017

One of the best names in the US. A very diversified base. There is talk of reducing the Frank-Dodd effect which would be helpful to the sector. Also, rising interest rates will be helpful to them. He is expecting a lot more growth on their loan activity. If you are going to have one name in the US, this is the one.

banks

One of the best names in the US. A very diversified base. There is talk of reducing the Frank-Dodd effect which would be helpful to the sector. Also, rising interest rates will be helpful to them. He is expecting a lot more growth on their loan activity. If you are going to have one name in the US, this is the one.

banks
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$23.070
Owned Owned
Yes

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COMMENT

In the last number of years, this has been moving more and more of the business to actually being an advisor or fund manager, versus directly owning the assets. There has been a major shift in the last 5-6 years in the landscape of investments. Of all the money that went into mutual funds in the last 3 years, 8X of all funds put together went into the Vanguard funds. Long-term, he thinks there is going to be more assets moved into the space, more assets that have a target performance around it, and you are going to see earnings increase.

management/diversified

In the last number of years, this has been moving more and more of the business to actually being an advisor or fund manager, versus directly owning the assets. There has been a major shift in the last 5-6 years in the landscape of investments. Of all the money that went into mutual funds in the last 3 years, 8X of all funds put together went into the Vanguard funds. Long-term, he thinks there is going to be more assets moved into the space, more assets that have a target performance around it, and you are going to see earnings increase.

management/diversified
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$49.460
Owned Owned
Unknown

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HOLD
BCE Inc.(BCE-T) 

April 20, 2017

A great income name and has been a great dividend stock. 4.7% dividend yield, and expects that will get increases of about 5% over the next few years. That is likely to equal what the earnings growth is going to be. They’ve had some good penetration on the wireless business. Has a great deal with Telus (T-T) which allows them to lower the costs of their infrastructure. Trading at a high valuation of over 18X earnings.

telephone utilities

A great income name and has been a great dividend stock. 4.7% dividend yield, and expects that will get increases of about 5% over the next few years. That is likely to equal what the earnings growth is going to be. They’ve had some good penetration on the wireless business. Has a great deal with Telus (T-T) which allows them to lower the costs of their infrastructure. Trading at a high valuation of over 18X earnings.

telephone utilities
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$61.260
Owned Owned
Yes

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BUY

From a valuation metric, this would look like a certain Buy. It has the cheapest valuation for a bank. Trading at 11.5X earnings. High dividend yield of about 7.5%. In the last 8 quarters, they have beaten on earnings and on revenue. There is the acquisition of the US bank which they had to pay up for. They are going to have to issue equity, which may cause some near-term weakness. Also, it is the least geographical diverse Canadian bank and is the most reliant on the Canadian consumer.

banks

From a valuation metric, this would look like a certain Buy. It has the cheapest valuation for a bank. Trading at 11.5X earnings. High dividend yield of about 7.5%. In the last 8 quarters, they have beaten on earnings and on revenue. There is the acquisition of the US bank which they had to pay up for. They are going to have to issue equity, which may cause some near-term weakness. Also, it is the least geographical diverse Canadian bank and is the most reliant on the Canadian consumer.

banks
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$112.540
Owned Owned
Unknown

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COMMENT
Cisco(CSCO-Q) 

April 20, 2017

If you include the cash, this is quite a cheap stock. It is basically trading at about 16-17X earnings and the market cap is about $165 billion. People forget that there is $60 billion plus in cash sitting on the balance sheet. Even if you net out the debt of about $30 billion, you are taking the valuation down to about 13 or 14 times. Not including the debt, it is about 10 times. The growth profile is going to be low. The dividend is about 3% and there is a strong potential that you could see some special dividends, or an acquisition to drive growth. An attractive investment.

electrical/electronic

If you include the cash, this is quite a cheap stock. It is basically trading at about 16-17X earnings and the market cap is about $165 billion. People forget that there is $60 billion plus in cash sitting on the balance sheet. Even if you net out the debt of about $30 billion, you are taking the valuation down to about 13 or 14 times. Not including the debt, it is about 10 times. The growth profile is going to be low. The dividend is about 3% and there is a strong potential that you could see some special dividends, or an acquisition to drive growth. An attractive investment.

electrical/electronic
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$32.830
Owned Owned
Unknown

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COMMENT

Effectively a creation of a preferred share and a capital share. If the stock performed quite well, you are getting a leveraged investment effectively on the preferred share. EG, on a $60 stock, you could have a $30 preferred share and a $30 capital share. If the capital share goes from $60 to $66, you have now gone from $30 to $36 giving you a 10% improvement in terms of return. What people don’t realize is a) the leverage, but b) preferred shares in the structure have to be paid out first. Consequently, the way these are structured is that the dividend coming from the underlying portfolio, simply pays the dividend to the preferred share. If they are paying a dividend on the capital side, that is typically coming from expected price appreciation or option writing. If you are a higher risk investor, it is something you could consider.

Effectively a creation of a preferred share and a capital share. If the stock performed quite well, you are getting a leveraged investment effectively on the preferred share. EG, on a $60 stock, you could have a $30 preferred share and a $30 capital share. If the capital share goes from $60 to $66, you have now gone from $30 to $36 giving you a 10% improvement in terms of return. What people don’t realize is a) the leverage, but b) preferred shares in the structure have to be paid out first. Consequently, the way these are structured is that the dividend coming from the underlying portfolio, simply pays the dividend to the preferred share. If they are paying a dividend on the capital side, that is typically coming from expected price appreciation or option writing. If you are a higher risk investor, it is something you could consider.

0
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$7.910
Owned Owned
Unknown

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TOP PICK

There are better opportunities now in Europe and Japan. This gives you a broader exposure across Europe of all the countries, with a little bit less on the UK. Also, there is a better mix in terms of stability in the sectors. In the last 3 years, there has been significant outperformance on this ETF, but last year underperformance. Good dividend yield.

E.T.F.'s

There are better opportunities now in Europe and Japan. This gives you a broader exposure across Europe of all the countries, with a little bit less on the UK. Also, there is a better mix in terms of stability in the sectors. In the last 3 years, there has been significant outperformance on this ETF, but last year underperformance. Good dividend yield.

E.T.F.'s
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$66.400
Owned Owned
Yes

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COMMENT
Enbridge(ENB-T) 

April 20, 2017

Enbridge (ENB-T) or Enbridge Income Fund (ENF-T) for dividend income? This one is the company that is building the pipeline and the energy services, etc. Once that is completed, it is largely sold to the Enbridge Income Fund.

oil/gas pipelines

Enbridge (ENB-T) or Enbridge Income Fund (ENF-T) for dividend income? This one is the company that is building the pipeline and the energy services, etc. Once that is completed, it is largely sold to the Enbridge Income Fund.

oil/gas pipelines
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$56.430
Owned Owned
Unknown

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COMMENT

Enbridge (ENB-T) or Enbridge Income Fund (ENF-T) for dividend income? Enbridge is the company that is building the pipeline and the energy services, etc. Once that is completed, it is largely sold to this fund. Pays about a 6.1% dividend yield. The stock is about 8%-10% off its high, and is a reasonable valuation. They are expecting about $9 billion of additional products in the next 3 years and dividend hikes of about 10% a year in the next 2-3 years.

oil/gas

Enbridge (ENB-T) or Enbridge Income Fund (ENF-T) for dividend income? Enbridge is the company that is building the pipeline and the energy services, etc. Once that is completed, it is largely sold to this fund. Pays about a 6.1% dividend yield. The stock is about 8%-10% off its high, and is a reasonable valuation. They are expecting about $9 billion of additional products in the next 3 years and dividend hikes of about 10% a year in the next 2-3 years.

oil/gas
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$33.690
Owned Owned
Unknown

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COMMENT
Fortis Inc.(FTS-T) 

April 20, 2017

Which utility stock has the best dividend growth profile? He would suggest you look at this one, which recently made a big acquisition in the US. They are paying about 3.6% now, and are committed to growing the dividend at about 5%-6% per year. Earnings are projected to grow at a similar rate. Trading at a reasonable valuation.

electrical utilities

Which utility stock has the best dividend growth profile? He would suggest you look at this one, which recently made a big acquisition in the US. They are paying about 3.6% now, and are committed to growing the dividend at about 5%-6% per year. Earnings are projected to grow at a similar rate. Trading at a reasonable valuation.

electrical utilities
Lorne Zeiler

Portfolio Manager & Wealth Advisor, TriDelta Financial...

PricePrice
$44.240
Owned Owned
Unknown

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