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Stock Opinions by Kevin Burkett

COMMENT
Markets. Tech looks overvalued. He doesn't try to guess where we are in the economic cycle. Where to find value depends on how you define it. It's a bit of an arbitrary concept to make the divide between growth and value. Those in the growth camp tend to favour steady, reliable growth year over year, with less focus on price. Whereas value investors calculate intrinsic value and look for deals. Looking at the Russell 1000, we find almost a 10x excess PE ratio on that growth basket. Large cap tech faired well through the pandemic, and now there might be an opportunity for value.
Unknown
COMMENT
Inflation. Inflation really changes the conversation. New US president, and the world is reopening. A lot of uncertainty around medium-term impact of interest rate decisions. If Canada's CPI accelerates, he expects the trend will continue of value outperforming growth.
Unknown
DON'T BUY
Not keen. If you have a sizable portfolio, you probably already have a nice house, so better to diversify your equity portfolio out of what HCG does. Warren Buffett exited.
investment companies / funds
DON'T BUY

Damaged business model. Key risk is where you see energy price volatility, the business model doesn't make sense. It does make sense in the mid-$60 range, where we are now, which is why people are picking it up. But he favours TOU.

Oil and Gas (Integrated Oils)
HOLD

Tends to lag in all but very strong market conditions. One of the more aggressive of the Canadian banks. He's cautious. A very positive macro environment has created the returns you'd expect from the banks. He favours BMO or NA as, when regulatory restrictions are lifted, these are the two most likely to hike dividends.

banks
WAIT

Not the time to buy. It got outmaneuvered with the KSU deal. He's not worried they'll struggle without KSU. He's worried they'll go and do something that makes less sense only to prove that the acquisition path is the right way forward. Wait for 4-6 months. He prefers CN.

Transportation
DON'T BUY

Has traded up quite nicely, so this is not a good entry point. Being from western Canada, the regional bank he prefers is CWB. In Canada, we have lots of choices on banks, and the regional ones are always a trade. His large cap favourites are RY, TD, and BNS.

banks
COMMENT

Working to diversify, including owning Ontario real estate. Undergoing a review to calculate capital differently which, if successful, would let them compete more aggressively on loan products. Regional banks are trades for him, in and out. Prefers this to LB.

banks
BUY

His personal favourite, a forever hold. Great presence in retail. Great footprint into the US. A close second to RY as the most conservative. Expects positive earnings surprises.

banks
HOLD
A misunderstood name. People saw it as bricks and mortar retail. Its exposure to any retail is in favourable categories such as groceries, medical, department stores. Not big box or malls. Still likes it, though it's not the value it was. Prefers industrial, commerical. Worries about residential, as the rents get capped.
property mngmnt / investment
COMMENT
REITs. Likes retail exposure in favourable categories such as groceries, medical, department stores. Prefers industrial, commerical. Worries about residential, as the rents get capped.
Unknown
COMMENT
Gold. A great place to leave money in all but the most pressured markets. Gold has lost its lustre in favour of crypto, so that might be an opportunity. Not keen on gold companies, as they're perpetually expensive. To justify the price, you have to be really optimistic on the price of gold. Owning the physical commodity may be a better bet. Stays away from heavily promoted mid-caps. When gold prices move higher, so do costs. Likes the streamers such as FNV and WPM, and you don't have to worry about cost inflation. WPM has a narrower basket and is easier to understand. Not positive on gold in anything but short-term cases.
Unknown
HOLD
Another favourite of his. Tax-preferred dividends, even though it's on a global scale. Quality is well understood by the markets. Not sure if dividend hikes are imminent. His concern is that they overreach in capital markets, and get away from the crown jewels of the Canadian banking brands. Own, put it away, and don't think about it.
banks
BUY
The most volatile of Canadian lifecos, because it has the greatest difference between reported earnings and core earnings due to having a ton of both market and interest rate exposure. Likes it. Nice franchise in the US and Asian exposure to the emerging consumer. It's done increasingly well the last 10 years.
insurance
DON'T BUY

Big fan of telecoms, though they didn't deliver last year as expected. Telecoms are very defensive and operate in an oligopoly. RCI is OK, but not as keen on it compared to others in the space. Least enthusiastic about cable. Ton of risk on the Shaw deal.

Cable
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