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Stock Opinions by The Monthly Gems by Allan Tong

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CARS' performance mirrors the rise and fall of e-cars of the past year, which returned shareholders a tidy 70%, though has flatlined year-to-date by barely rising 2%. Since bottoming in mid-May, the sector has been rangebound. CARS has been stuck between $45-50, stuck in no man's land when it was trading below $30 12 months ago, but plunged from $63 after Valentine's Day when e-car fever was hot. However, rangebound is sometimes a good time to enter an equity. Consider this a spec buy, but beware that the average daily volume is only 5,633 shares.
E.T.F.'s

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Is big tech the new defensive? After the inflation/interest rate scare of the spring, investors are runnuing back into these names. Of course, there are pros and cons. Stocks like Apple, Amazon and Microsoft boast explosive growth, but pay low/no dividends and trade at high PE's. Short answer: yes, you need to own at least some big tech to balance your steady eddys and dividend payers. While Apple is trading below US$150 per share, Alphabet (Google) is changing hands at over US$2,700 for a single share. The typical retail investor can't afford that, which why is VGT is handy. VGT charges only a 0.1% MER and pays a 0.66% dividend yield, which is modest, but remember that most tech names pay nada. Apple and Microsoft comprise 36% of VGT, so be comfortable with these two companies.
E.T.F.'s

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However, the consensus from the OECD to Deloitte to Scotiabank believe that vaxxes and a strong manufacturing sector will drive Japan's recover late this year. It'll soon be Japan's time to shed Covid and shine. If you don't know which Japanese companies to invest in, then EWJ is a handy alternative. Toyota, Sony, SoftBank, Mitsubishi and Nintendo are among the top holdings. EWJ pays a 1.13% dividend and charges a slightly high 0.51% MER. A plus is that volumes are typically six million per day, so it's fairly steady. Also, the PE is only 5x.
E.T.F.'s

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This is a tech, travel and reopening giant that will benefit as more countries allow their people to travel, which will unleash pent-up demand. It's a large travel company that owns Booking.com, Kayak.com, Priceline.com and Rentalcars.com. Use BKNG to book plane tickets, hotel rooms and rental cars, often at a discount. Like all travel stocks, BKNG was hammered by Covid, but will benefit from a strong bounceback. Though operating at a $311 million loss last quarter (all figures in USD), BKNG did hold $12 billion in cash, just slightly below its $14 billion debt. Americans are traveling like mad, what one analyst has termed “travel revenge,” but the States accounts for less than a third of BKNG's business. Rather, overseas, particularly Europe, is BKNG's bread and butter, and Europe is starting to reopening beyond the U.K. The street has eight buys and eights holds on the stock at a US$2,581 price target. Caveats: Booking Holdingspays no dividend, and shares are floating under US$2,200 these days.
department stores

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Winnipeg busmaker was once a Bay Street darling, then production numbers tanked before Covid sent the stock went into purgatory. Emerging from the lockdown, though, NFI is now in a good position to capitalize on the e-vehicle trend. The busmaker is rolling out more zero-emission vehicles, which cities across North American will favour under the eco-friendly Biden administration. Jurisdictions across North America will need to replace their aging fleets, anyway. NFI has also been expanding into Europe, including the U.K. In fact, at the end of June, NFI delivered four double-decker e-buses to Edinburgh. The street targets $34.67 or 24% upside based on six buys. The stock has edged up in the last weeks, but remains $5 below its 52-week high. Pick it up and see where the ride takes you before committing more, and collect the 3% dividend yield.
Automotive

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This tech name gets lost among the big egos of Tesla, Apple and Microsoft, but it performs just as well. This e-commerce platform in really an online marketplace selling vintage goods, homemade products and craft items from private sellers. We're talking jewelry, toys, clothing and furniture. As expected, business boomed during the lockdowns, so it runs the risk of being pigeonholed as a Covid play. In fact, year to date, Etsy shares have climbed only 14.4%, but its price swings have been wide, making this attractive to short-term traders. At the end of June, Etsy had returned to $200, but it soared at high as $245 in early March, then plunged below $160 in early May. The volatility is due more to the fickleness of Wall Street than the stock's earnings performance. After all, it's handily beaten the street in its last four quarters. Currently, 11 analysts would buy it and only one would hold. The price target is $220.50 or 11% upside. July should be as choppy as June as the market see-saws between tech and cyclicals, so be nimble and buy on one of those dips.
Technology

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As the world drifts to e-cars and renewable energy, oil continues to rebound in 2021, driven by the reopening. American cars are hitting the road this Memorial Day weekend and will cover a lot of miles this summer fueled by pent-up demand from people dying to get out of their homes. Others will fly. All this spells gas gas gas. ARC shares are up an astonishing 55% so far this year and has beaten Stockchase research's own price target of $8.75 easily. In ARC's favour is its robust cash flow, around 23%. Its last quarter, Q1, saw a slum-dunk earnings beat of $0.50 compared to the expected $0.18. True, ARC's PE is not the lowest out there at 17.4x. To compare, Whitecap Resources trades at 8.9x and Tourmaline Oil at 9.2x, though AltaGas, a nat gas company, trades at 18.6x. ROE stands at 6.54% vs. the industry's -14$. At the very least, ARC's 2.58% dividend is safe at a 45% payout ratio, roughly two-thirds lower than its peers.
oil / gas

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Question: Which major Canadian bank has performed the best year-to-date. TD? Royal? Nope. National Bank. Shares have climbed over 32%, just ahead of the Bank of Nova Scotia. The bigger siblings may get the love, but National Bank is prospering in the shadows. This despite NB disappointing the street last week when it released its Q2. Profits topped estimates, but revenue in the financial markets unit slipped 5.2% from a year ago. Then again, investors had high expectations going into this report, and NB's report was overall strong. YOY, overall net income more than doubled to $801 million or $2.25 per share. The company beat the expected $2.00 EPS by 25 cents, marking NB's fourth-straight beat. Problem is, NB shares have run up fast this year and the street sees only 4.21% upside ahead at a price target of $98.25 (based on four holds and four buys). If you already own, you better be DRIPping, and newbies can enter on even a modest dip.
banks

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Weed stocks have been enjoying a resurgence after plummeting after Canadian legalization in October 2018. The driver, of course, is American legalization, happening state-by-state but definitely moving forward after the Democrats took the White House last November. While several names are buying candidates, from Canopy to Curaleaf, Hexo has soared 84% so far this year and yet it's still well off its 52-week highs. Such is the volatility of cannabis stocks, but investors liked Hexo's purchase of Redecan, a private Canadian company, which is widely expected to make Hexo the adult-use market leader in Canada, including Ontario and Quebec. Investors also liked Hexo's deal with 48North Cannabis Corp. which sees Hexo gobbling up their outstanding common shares. Recent earnings indicate a quarterly loss of $-0.05 EPS, but a 68.8% jump YOY with revenues even higher. The cannabis biz is still consolidating, but Hexo's recent deals have been savvy and pave the way to a bright future. The run-up in shares, however, warrants a partial buy to take advantage of sector volatility. The street targets $10.59 or 22% upside based on six holds and two buys.
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This is America's largest steel producer and will directly benefit from an infrastructure boom as everything from bridges to buildings will need steel. Also, makers of cars and applicances are bouncing back strongly from last year's lockdowns. In mid-March, Nucor issued guidance by projecting $3.10 EPS, which was far above the street's $2.79. A month later, the company released Q1 earnings of US$942.4 million, which vaulted past its previous quarterly high from 2008 by more than US$200 million. Further, the company stressed in its forecast that current strong demand “will continue through the rest of 2021” and 2021 profits should reach US$1.9 billion, close to matching previous record annual earnings. The good times are likely to continue, though there's always the chance that foreign competitors could limit demand for Nucor. Chances are, however, that the next few quarters look rosy.
steel

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Why buy when you can rent, or buy second-hand? URI is the world's biggest heavy-equipment rental company, and business is good. In 2020, the year of the lockdown, the company spent US$961 million in buying equipment. This year, it will more than double that number. Last week, the company beat its Q1 earnings and bumped up its 2021 forecast. EPS came in at $3.45 vs. the street's $3.10. Total revenues beat by 2.4%, but were down 3.2% year-over-year. Used equipment sales topped US$267 million compared to US$208 million a year ago. The balance sheet is sound at US$3.745 billion of total liquidity, which marks a US$672 million increase YOY. Free cash flow jumped 19.6% to US$725 million. Guidance rose as much as US$9.025 billion in total 2021 revenue to a range of US$9.05-9.45 billion. No, URI doesn't offer a dividend, but it is paying down debt and boasts good cash flow. The stock has moved up 38% this year, but will likely continue to climb with the entire infrastructure complex.
Financial Services

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If you can't decide on one infrastructure name, then this ETF holds 101 such stocks starting with Deere & Company, plus Kansas City Southern, Emerson Electric, Nucor and Parker Hannifin Corp. Averaging nearly two million shares, the daily volumes of PAVE are higher than other American infrastructure ETFs, such as IFRA, so will offer less volatility. Lower volatility, after all, is one big reason to buy an ETF instead of an individual stock in a sector. The trade-off are lower returns. Witness that Deere has rallied 37% year-to-date, Nucor 54% while PAVE has climbed 21.5%. Other considerations are PAVE's 0.47% MER and 0.37% dividend yield. Again, Pave is a safe and convenient way to play U.S infrastructure within a wider portfolio.
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To illustrate, in 2016, SPACs raised $3.2 billion (all figures in USD). Last July, Bill Pershing sponsored his own SPAC, Pershing Square Tontine Holdings, which raised $4 billion alone. PSTH-N has tumbled from its mid-February peak of $34.10 and is trading around $24, though it popped to $25 Monday. However, PSTH has yet to acquire a company and is keeping Wall Street in suspense. However, even the track record of billionaire investor Pershing cannot sustain the share price. Those who believe in Pershing have already bought in, but the rest of it may want to watch from the sidelines until he reveals his target company or industry and any shred of information.
Financial Services

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Collier Creek Holdings went SPAC in late-August 2020 to become Utz, a maker of snacks under such brands as, Zapp's, Golden Flake and Good Health. This Pennsylvania company has been around for nearly a century, but went public at the right time—in the middle of the pandemic. People stay at home and eat snacks. For example, Q3 year-over-year sales jumped 24%. Last December, Utz bought Truco Enterprises, which churns out tortilla chips and salsa for $480 million. A good fit that will help transform Utz from a regional player into a national one. The news bumped shares from $19 to $22.50. Utz has been climbing ever since, though tumbled 4% after announcing slightly disappointing guidance on March 18 though it crushed Q4 earnings estimates. Since then, Utz shares have been choppy, but rising steadily in the past week. Utz pays a modest dividend of 0.96%, but six analysts signal a buy and two a hold, and they target $27.13, or 8.52% upside. Despite a reopening American economy, Utz remains poised to sell snacks and meet its projections.
food processing

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Bitcoin is the most famous cryptocurrency (there are many) and is highly volatile. Bitcoin's plunges and leaps are legendary. For instance, in 2010, one Bitcoin traded at 8 cents. Last week, it topped $58,000. First off, Bitcoin is a digital currency, meaning that it's not a physical coin, but a currency that exists in a public ledger nestled in a network of computers and accessed through through a series of passwords, like keys that open a bank vault. (Don't lose your keys or you're screwed.)
E.T.F.'s
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