Stock Opinions by Brian Madden - Stockchase Experts
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Brian Madden @

On Stockchase since : Aug 2016

Senior VP & Portfolio Manager at Goodreid Investment Council

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Stock Opinions by Brian Madden - Stockchase Experts

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COMMENT
General Market Comment 

February 26, 2019

The TSX is up 16% since the low of Xmas Eve 2018. Shooting fish in a barrel. Copper is strong, hitting highs, and is a harbinger of a soft economic landing. Or this rally could be FOMO after de-risking in Q4-2018. We're starting to see wage inflation though nothing like int he 1970s. The Fed wants to get back to a neutral rate, and he takes Powell at his dovish word.
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The TSX is up 16% since the low of Xmas Eve 2018. Shooting fish in a barrel. Copper is strong, hitting highs, and is a harbinger of a soft economic landing. Or this rally could be FOMO after de-risking in Q4-2018. We're starting to see wage inflation though nothing like int he 1970s. The Fed wants to get back to a neutral rate, and he takes Powell at his dovish word.
Unknown
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$0.000
Owned Owned
Unknown

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DON'T BUY
Intertape Polymer Group(ITP-T) 

February 26, 2019

He prefers CCL, which has 5 times the size than ITP with better margins. ITP is a small player in a space domianted by giant, 3M. ITP has a lot of commodity exposure and cost pressure that is difficult to pass to end clients who are big multinationals. That said it has impressively improved margins over the past decade. But their commodity expoure and heavy leverage are concerns if we see an economic downturn. You could see a bounce after earnings next week though, but long-term look elsewhere in this sector.
packaging/containers
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He prefers CCL, which has 5 times the size than ITP with better margins. ITP is a small player in a space domianted by giant, 3M. ITP has a lot of commodity exposure and cost pressure that is difficult to pass to end clients who are big multinationals. That said it has impressively improved margins over the past decade. But their commodity expoure and heavy leverage are concerns if we see an economic downturn. You could see a bounce after earnings next week though, but long-term look elsewhere in this sector.
packaging/containers
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$18.600
Owned Owned
No

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BUY
Capital Power(CPX-T) 

February 26, 2019

A defensive play? Their legacy business was coal-fired plants in Alberta, but today faces greening under the Notley government. So, CPX struck a deal with Notley to diversify assets away from those plants into more green power. They pay nearly a 7% yield, which is safe, covered by good cash flow. A good defensive stock.
electrical utilities
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A defensive play? Their legacy business was coal-fired plants in Alberta, but today faces greening under the Notley government. So, CPX struck a deal with Notley to diversify assets away from those plants into more green power. They pay nearly a 7% yield, which is safe, covered by good cash flow. A good defensive stock.
electrical utilities
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$29.990
Owned Owned
Unknown

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BUY
Parex Resources Inc.(PXT-T) 

February 26, 2019

Likes it, though it had a big plunge late last year, reflecting a weak commodity price. PXT also blundered by putting itself up for sale without having an intial stalking horse bid first. Otherwise, it's business as usual with profitable and quickly growing oil production in Colombia at 50,000 barrels of oil a day. CPX makes 25-30% ROE, because they sell at international oil prices, not the lower WCS. He expects PXT to push through old highs. He's bullish.
oil/gas
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Likes it, though it had a big plunge late last year, reflecting a weak commodity price. PXT also blundered by putting itself up for sale without having an intial stalking horse bid first. Otherwise, it's business as usual with profitable and quickly growing oil production in Colombia at 50,000 barrels of oil a day. CPX makes 25-30% ROE, because they sell at international oil prices, not the lower WCS. He expects PXT to push through old highs. He's bullish.
oil/gas
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$20.240
Owned Owned
Yes

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SELL
Magna Int'l. (A)(MG-T) 

February 26, 2019

Sold it last fall because the auto cycle has peaked here and in Europe. They also have problems with a Chinese joint venture that could become thorny. Their margins were under pressure, partly due from the steel/aluminum tariffs. There's more risk than reward here. He's impressed by the stock, but it's time to lighten up on this.
Automotive
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Sold it last fall because the auto cycle has peaked here and in Europe. They also have problems with a Chinese joint venture that could become thorny. Their margins were under pressure, partly due from the steel/aluminum tariffs. There's more risk than reward here. He's impressed by the stock, but it's time to lighten up on this.
Automotive
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$70.030
Owned Owned
No

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BUY
He'd still buy it at current 52-week highs, which are a sign of strength. It's a great operator of 12,000 convenience stores at gas stations across North America and Eruope, and could expand to Asia. They're good at selling cigarettes and coffee which pay much higher margins than gas. Also, they're partnering with Canopy, which is a smart move into cannabis.
food stores
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He'd still buy it at current 52-week highs, which are a sign of strength. It's a great operator of 12,000 convenience stores at gas stations across North America and Eruope, and could expand to Asia. They're good at selling cigarettes and coffee which pay much higher margins than gas. Also, they're partnering with Canopy, which is a smart move into cannabis.
food stores
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$75.040
Owned Owned
Yes

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DON'T BUY
Power Financial Corp(PWF-T) 

February 26, 2019

They have an emerging robo-advisor business among their other businesses, GWL and Investors Group which are sluggish growers. Unless something macro in the insurance space (interest rate hikes) or an acquisition happens, PWF will simply grind along. Mutual funds are stagnating or declining (Investors Group charges very high fees). Safe dividend, but he doesn't see much capital appreciation here.
finance/leasing
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They have an emerging robo-advisor business among their other businesses, GWL and Investors Group which are sluggish growers. Unless something macro in the insurance space (interest rate hikes) or an acquisition happens, PWF will simply grind along. Mutual funds are stagnating or declining (Investors Group charges very high fees). Safe dividend, but he doesn't see much capital appreciation here.
finance/leasing
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$29.070
Owned Owned
Unknown

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PAST TOP PICK
North West Company(NWC-T) 

February 26, 2019

(A Top Pick Feb 22/18, Up 23%) He bought at the right time; NWC has since benefitted from the rise in defensive stocks. It's a multi-year secular grower, insulated from competitors. NWC bought a small regional airline and have struggled to integrate it into their supply chain, and were hit hard in the Caribbean where they also operate from hurricanes in 2017. A macro tailwind is that Alaska and the far north have had strong economies. He's sticking with this and happy to.
merchandising/lodging
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(A Top Pick Feb 22/18, Up 23%) He bought at the right time; NWC has since benefitted from the rise in defensive stocks. It's a multi-year secular grower, insulated from competitors. NWC bought a small regional airline and have struggled to integrate it into their supply chain, and were hit hard in the Caribbean where they also operate from hurricanes in 2017. A macro tailwind is that Alaska and the far north have had strong economies. He's sticking with this and happy to.
merchandising/lodging
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$32.380
Owned Owned
Yes

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PAST TOP PICK
Inter Pipeline(IPL-T) 

February 26, 2019

(A Top Pick Feb 22/18, Up 1%) He just sold it last week. All of his returns came from the dividend. They're building a giant petrochemical plant in Alberta, which is a big capital expenditure. To pay for this in part, IPL is deferring dividend payments. Also, a new competitor in Alberta and Saskatchewan is taking on their oil pipeline business, which triggered his sell. Also, their storage business in Europe is struggling with storage capacity. The dividend is safe, but he doesn't see growth in the business.
oil pipelines
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(A Top Pick Feb 22/18, Up 1%) He just sold it last week. All of his returns came from the dividend. They're building a giant petrochemical plant in Alberta, which is a big capital expenditure. To pay for this in part, IPL is deferring dividend payments. Also, a new competitor in Alberta and Saskatchewan is taking on their oil pipeline business, which triggered his sell. Also, their storage business in Europe is struggling with storage capacity. The dividend is safe, but he doesn't see growth in the business.
oil pipelines
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$21.100
Owned Owned
No

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PAST TOP PICK
Toronto Dominion(TD-T) 

February 26, 2019

(A Top Pick Feb 22/18, Up 9%) He's happy with this. They report in two days. He likes TD's strong Canadian banking franchise as well as their US operations. $1.71 EPS is the street's expectation which would be 10% YOY growth and would lead its sector. TD is among the top three Canadian banks, best of breed.
banks
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(A Top Pick Feb 22/18, Up 9%) He's happy with this. They report in two days. He likes TD's strong Canadian banking franchise as well as their US operations. $1.71 EPS is the street's expectation which would be 10% YOY growth and would lead its sector. TD is among the top three Canadian banks, best of breed.
banks
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$76.720
Owned Owned
Yes

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DON'T BUY
Shopify Inc.(SHOP-T) 

February 26, 2019

Has the run-up been too far, too fast? He sold it last summer around $223 due to high expectations and valuation. The stock was struggling to break above $230. It's a a volatile stock that plunged to $160 in December 2018. The valuation is now about 1000x PE. Will this be the next Amazon--or not? If not, then it's likely overvalued. True, Shopify is likely the best homegrown tech story in Canada. If you own this, lighten up now. If you don't, then sit on your hands.
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Has the run-up been too far, too fast? He sold it last summer around $223 due to high expectations and valuation. The stock was struggling to break above $230. It's a a volatile stock that plunged to $160 in December 2018. The valuation is now about 1000x PE. Will this be the next Amazon--or not? If not, then it's likely overvalued. True, Shopify is likely the best homegrown tech story in Canada. If you own this, lighten up now. If you don't, then sit on your hands.
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$244.140
Owned Owned
No

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DON'T BUY
Encana Corp(ECA-T) 

February 26, 2019

The market de-rated this stock after last fall after making a big purchase in the U.S. which is a good idea because nat. gas But this purchase was too expensive and the market isn't confident Encana can integrate this company. There's also a long-term risk of oversupply in natural gas.
oil/gas
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The market de-rated this stock after last fall after making a big purchase in the U.S. which is a good idea because nat. gas But this purchase was too expensive and the market isn't confident Encana can integrate this company. There's also a long-term risk of oversupply in natural gas.
oil/gas
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$9.180
Owned Owned
No

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DON'T BUY
Altagas Ltd(ALA-T) 

February 26, 2019

ALA has recently risen from the low-teens to $16 He sold this in 2016. He didn't know it then, but ALA bought a big utility in Washington. They are de-leveraging when many other companies are. He isn't fond of the cost of that utility. They just changed CEO's under strange circumstances. The CEO has cut the dividend, but not enough has changed for him. Take profits or don't own.
oil/gas
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ALA has recently risen from the low-teens to $16 He sold this in 2016. He didn't know it then, but ALA bought a big utility in Washington. They are de-leveraging when many other companies are. He isn't fond of the cost of that utility. They just changed CEO's under strange circumstances. The CEO has cut the dividend, but not enough has changed for him. Take profits or don't own.
oil/gas
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$16.200
Owned Owned
No

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WEAK BUY
Vermilion Energy Inc(VET-T) 

February 26, 2019

They produce in France, not western Canada, and are exposed to international oil prices, not WCS. VET is respectible in their sector, but he prefers Parex. But anyone selling at international oil prices deserves a nod.
oil/gas
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They produce in France, not western Canada, and are exposed to international oil prices, not WCS. VET is respectible in their sector, but he prefers Parex. But anyone selling at international oil prices deserves a nod.
oil/gas
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Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$33.290
Owned Owned
No

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COMMENT
No, retail is not going out of fashion. HR will work out okay and will grind out a slowly growing dividend. The fear out there is that Amazon will destroy all retail--but that's unfounded. Also, HR diversifies into building condos too. A safe dividend, but with modest growth prospects.
property mngmnt/investment
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No, retail is not going out of fashion. HR will work out okay and will grind out a slowly growing dividend. The fear out there is that Amazon will destroy all retail--but that's unfounded. Also, HR diversifies into building condos too. A safe dividend, but with modest growth prospects.
property mngmnt/investment
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0 comments
Brian Madden

Senior VP , Goodreid Investment ...

Price Price
$22.750
Owned Owned
Unknown

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