Chris Blumas

Tapering is the biggest risk in the market now. Liquidity has driven the market during the pandemic. Recently, the US Fed announced it would start tapering and the US Treasury said it will build up its cash balance. Altogether, this will impact all assets globally. That said, these measures can be moderated as we go along. He can't say what the timeline would be, but a change is coming. Inflation is definitely a big risk, but less than tapering. Inflation will likely persist for a while, which will impact purchasing power. To hedge against this, invest in diversified, defensive stocks.

Future as a fossil fuel company He likes it a lot. Attractively valued that pays a good dividend. Yes, it's hard to approve new pipeline, but fossil fuels will remain a part of the supply to meet energy demand. ENB's pipelines move natural gas as well as oil, and pipelines can be changed to suit demand. Oil demand will decline over time. Sovereign wealth funds have been rejecting oil producers, but not the pipelines.

A wonderful, scalable business, but he hasn't bought it lately. A great compounder with great long-term potential, but the valuation is at 30x earnings--high. A concern is a future challenge by regulators, and the stock will pull back then which will be the time to buy.

About 25% of revenue comes from China and India, and the E.U. won't defend UL against those countries, because UL is a British company. How to deal with this geopolitical risk? He invests in EM indirectly, for instance through UL or a BNS (Latin America). UL is a huge business and they're trying to cut costs, partly prodded by activists. He likes their product portfolio and their presence in emerging markets. Their subsidiaries are well-entrenched, so that lowers risk in EMs. Also, they sell essential products whereas government crackdowns in China have hit fintech and data companies. UL trades around 18x earnings and pays a solid dividend.

PKI vs ATD'B They've done a good job rolling up fuel distribution. It's compared to ATD'B a lot, which he prefers because they're also in convenience stores as well as selling fuel--diversified. Also, ATD'B managers are phenomenal. PKI is too, but it's a different business. ATD'B allocates capital well in buying back shares and buying companies to create value--they have more levers to pull.

CN vs. CP He sold CNR earlier this year over high valuation. Both enjoy an oligopoly. Another concern is growth for both rails. Exit when the PE gets too stretch. Both were so desperate for growth that they battled over KSU. He prefers CP, though both are well run, though both PEs are rich. He'd add to CP on a pullback.

CN vs. CP He sold CNR earlier this year over high valuation. Both enjoy an oligopoly. Another concern is growth for both rails. Exit when the PE gets too stretch. Both were so desperate for growth that they battled over KSU. He prefers CP, though both are well run, though both PEs are rich. He'd add to CP on a pullback.

PKI vs ATD'B They've done a good job rolling up fuel distribution. It's compared to ATD'B a lot, which he prefers because they're also in convenience stores as well as selling fuel--diversified. Also, ATD'B managers are phenomenal. PKI is too, but it's a different business. ATD'B allocates capital well in buying back shares and buying companies to create value--they have more levers to pull.

(A Top Pick Feb 26/20, Up 39%) He still likes it. It has a unique business model: a pharmacy, pharmacy benefit management (PBM) and health insurer. Pays a good dividend, diversified and trades around 10x earnings. Free-cash flow yield is almost 9%. It's a durable business.

(A Top Pick Feb 26/20, Up 17%) Still a buy though it's lagged the other banks, due to its larger EM footprint. EM was hit hard during the pandemic. Trades around 10x earnings and pays a 4.5% dividend, but this will rebound. BNS is the most undervalued, trading at a 10% discount to peers. He likes RY and TD.

(A Top Pick Feb 26/20, Up 13%) He likes their business, though wouldn't add to it now. His buy price is $105. It has a global platform. They can buy back shares or companies. Organic growth had lagged, but in the last quarter picked up, given the backlog of work.

He gets a lot of questions about this and avoids it. He doesn't know how they get around these regulatory pressures. He prefers Google in the online ad space.

A phenomenal business, lumped into retail, but they're really a membership business. Their profit and cash flow come from membership and people stay members. An exceptional business model that offers consumers tons of value. His only concern is the high valuation, north of 35x earnings. You won't buy this dirt cheap, but wait for a pullback. He wishes he had bought this earlier. Costco can adopt to current supply constraints; they are efficient and resourceful.

Gold outlook You buy gold itself, a stock or a royalty company. The companies have not created a lot of value for shareholders, given high costs and cyclical commodity costs. So, he prefers a royalty company which invest in royalty streams and don't invest in capital costs. FNV has no net debt, trades at 40x earnings. Gold prices have been weak this year, and the Fed tapering will pressure gold.

They produce chips for other companies, like a foundry. He prefers this in the chip space vs. the pure plays, like Intel or Nvidia. )The current chip shortage was only partly caused by the pandemic.) The trouble with this sector is that you don't know who's on the cutting edge. It used to be Nvidia, but who will be the winner going forward? TSM is less risky because it makes chips for several companies, again like a foundry. They all have pricing power now, given the shortage. TSM's valuation is high, though cash flows are strong and they are reinvesting a lot. The chipmakers have momentum.