John Petrides

Market. From a PE multiple the stock market is at its highest since we have seen since from the last 5, 10, 15, and even 20-year periods. Relative to where interest rates are, where inflation is, where bond yields are, where else are you going to go? We are definitely in a healthier situation than in 2006 from the banks standpoint, and we don’t have a housing bubble, so the underlying macro environment looks pretty good. Historically, relative to interest rates and inflation, stock still look to be attractive.

Financials are one of his favourite sectors. Feels the wind is at the back of the banks. They are showing the healthiest balance sheets in 60 years. Interest rates are creeping higher, and the whole economy is doing quite well. Although this is up a lot over the past 12 months, it is still trading at a discount to where tangible BV will be 3 or 4 years from now. Really good value here.

Has been wrong on this for about the last 10 years. As a value investor, it is hard for him to buy into a stock like this. He doesn’t chase growth. This stock barely makes any money, and yet it continues to go up from a valuation standpoint. He would rather wait for a better entry point.

Prudential Financial (PRU-N) or the banks? He would own both. You need to diversify within your financial sector. The banking sector grows differently than life insurance. Life insurance is a bit more dependent on where interest rates are heading, and he thinks they are going to continue to creep higher. This company has a very strong balance sheet and a tremendous amount of capital in their balance sheet.

One of the largest mergers in the chemical industry, which can result in a large amount of cost cutting and synergies. They’ve outlined about $3 billion in synergies. In about 18 months they are going to break off into 3 different divisions, chemicals, agriculture as well as a 3^rd component. There is potential here for a tremendous success.

This has been a great performer over the past 2 years. Wait for a pull back, and let’s see what happens with holiday sales. A time to buy a name like this was 2 years ago when it was thought Amazon (AMZN-Q) was going to put them out of business. They do a great job of returning cash to shareholders. The acquisition of Jet.com made a lot of sense.

This really hit it out of the park with their earnings today. It’s up over 7%. A good, high quality company to have in a portfolio. Great balance sheet.

He would lump this in with Bank of America (BAC-N). The difference between the 2 is that this one has a more global presence. The balance sheet is really strong right now. They are returning cash to shareholders, and everything is moving in the right direction.

He likes the dividend on this. It is merging with Level 3 Communications (LVLT-N). The combined entity is going to have a tremendous amount of free cash flow. Level 3 has billions of dollars of net operating losses, so are not going to pay taxes for a very long time, which is going to really support the dividend for a long time. Until the deal closes, the fundamentals of the business they are in is deteriorating. This is selling off in unison with others that are under siege in the telecom industry. What they need is for the deal to close and for management to show investors what that combined entity and what the cash flow is going to be once they are together. He would suggest owners stay patient. Dividend yield of 11.5% will be sustainable under the new entity.

Continue adding to a technical stock portfolio, or buy this ETF? This is a very specific play on robotics, a niche within tech in and of itself. It depends on what percentage of your portfolio is technology stocks, and what size would you make BOTZ. There are 2 investment themes that have been tremendous home runs over the past 12 months. One is investors pricing in what is going to happen to robotics and how that is going to be disruptive to the labour economy, and the other one is artificial intelligence (AI). If you own a position in this ETF, he would continue to hold, but he would be careful about chasing this investment here.

(A Top Pick Feb 9/17. Up 13%.) One of his favourite companies, because their business is so sticky and they generate a tremendous amount of cash flow. Supplies all the billing and back-office support for telecom and cable companies. Switching costs are very high. They have no debt and generate a tremendous amount of cash flow. Grows their dividend at a nice clip every year.

(A Top Pick Feb 9/17. Up 16%.) This is doing okay, but there is some nervousness on what is going to happen with Hanes. In the upcoming Christmas season, they get a decent percentage of their sales from in-mall and store traffic. They are building an online presence. There is no reason why underwear, T-shirts and socks can’t be distributed online. This is a good stock.

(A Top Pick Feb 9/17. Down 38%.) This has been a dog this year. One problem is e-commerce on big box stores. Also, they have new management that is still trying to correct their brands and turn around sales. The new CEO is a former Google executive, and is bringing in a completely different attitude and vision to the toy industry. Barbie, American Girl and Fisher-Price have great brand power, and should and could be used better in a digital world where the company can earn more money.

If they can get advertising through video right, then the stock can go higher, and they can get room for growth. It is hard to bet against a visionary like Zuckerberg. The company and the stock can grow higher, but what is the right valuation to pay for it? At 30X earnings right now, it could be a bit too rich.

This could follow a similar pattern of Walmart, the worst performing stock on the Dow, but has been a home run since. Has a new CEO in place, who is doing what most CEOs are doing, trying to clean up the mess they inherited, selling off non-core businesses and trying to repair the balance sheet. Thinks this is going to be significantly higher in value 3 or 4 years from what it is today. Dividend yield of 4.4%, which he is comfortable with.