Martin Cobb, ASIP
Senior VP, Equities at Lorne Steinberg Wealth Management
Member since: Feb '25 · 95 Opinions
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| 0 | 3 25.00% | 5 41.67% | 2 16.67% | 2 16.67% | 0 0.00% | ||
| 1 Month | 0 | 0 0.00% | 5 55.56% | 2 22.22% | 2 22.22% | 0 0.00% | |
| 6 Months | 0 | 3 100.00% | 0 0.00% | 0 0.00% | 0 0.00% | 0 0.00% |
Stock Opinions by Martin Cobb, ASIP
Yes. Over the last 2 quarters, he's been surprised by how much tech capex has driven GDP growth. In the last quarter, it was more important than personal consumption, which is a huge part of the economy. So we have a stock market that depends on tech capex, and an economy with increasing dependence on tech capex. He finds that a bit worrisome.
The one thing that doesn't matter in the short term for markets to go up is valuation. Greenspan talked about "irrational exuberance" in late 1996. Markets continued to go up in 1997, 1998, and 1999, until it all went pear-shaped.
There's been a ton of AI investment. But the poster child for that, OpenAI, makes no money, though there are beneficiaries of that spend. Ultimately there has to be a return on investment. Without that, effectively we're in a bubble. History tells us that roughly 3/4 of innovations over the last 150 years have resulted in some sort of bubble. Why would we expect AI to be any different?
The narrative is still very strong, but we haven't seen a return on investment yet. Companies are throwing money at AI, and that will continue for a time, until it doesn't. At that point it could be quite nasty.
Last he saw, probability of a rate cut was ~80%. Almost a shoo-in for 25 bps cut. Last 3 months have seen a sea change with jobs market very poor and housing market moribund. Inflation seems to be under control.
This would be alongside the Fed Reserve doing the same, or maybe even more.
Third-largest coffee chain in the US, with just over 1k stores in 20 states. (SBUX has 17k stores, DNKN has ~9.5k.) Long runway of growth. Opening stores aggressively. Growth rate tipping down from 50% to 25%. Trades at 50x 2027 anticipated earnings for a coffee shop chain. Hmmm. Pretty near priced for perfection.
Earnings are tonight, so who knows what will happen? The narrative is very negative. But it continues to add ~10k subscribers a day to its Photoshop suite. Continues to deliver good, solid topline growth. Trading at half the valuation of 12 months ago, very attractive risk/reward.
Margin of safety is very high with a long-term view. It's investing heavily in its own AI suite of products. Not only Photoshop, but also document cloud business and CRM software.
Banks give $$ away and hope to get it back. Insurance companies take $$ in and try not to give it back.
Bank valuations are right up there on both sides of the border. He likes and owns both. For new money he'd tilt towards insurance companies, but be selective. For banks, you might want to take some money off the table.
It's a no-premium deal. Disappointed a number of investors. Looks like a sewn-up deal with respect to insiders and politicians. He likes copper, and it's harder and harder to find. Likes prospects and synergies for the combined mine in Chile.
He doesn't own mining companies, as they tend not to be good businesses. This one looks interesting if you want some copper.
He always thinks it's a great place to buy anniversary presents ;) It's done nothing wrong, and investors have fallen in love with it to some extent. He'd take some $$ off the table, and perhaps buy in again lower, though still likes it long term. Reaching saturation in Canada, so it's having to go abroad. International expansion can be good, but also problematic.
Worried a bit about growth in Canada slowing and not being offset enough by purchases further afield. Be mindful. Valuation of 40x PE is up there.
Admittedly, there are threats from AI to software, but this is a trusted outsourcer. Processes roughly 1 in 6 paycheques for NA workers. Handles $2.5T of clients' money every year. Large market share. Double-digit EPS growth. Not a down year in revenues this century, even during the global financial crisis.
Over 1M clients in 140 countries, but NA is 80+% of the business and it really is a US company. High 20s PE multiple. Yield is 2.09%.
