Martin Cobb, ASIP
Senior VP, Equities at Lorne Steinberg Wealth Management
Member since: Feb '25 · 77 Opinions
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| 0 | 0 0.00% | 3 50.00% | 2 33.33% | 1 16.67% | 0 0.00% | ||
| 1 Month | 0 | 0 0.00% | 3 50.00% | 2 33.33% | 1 16.67% | 0 0.00% |
Stock Opinions by Martin Cobb, ASIP
Equity risk premium compares earnings yield on the S&P 500 with bond yields, and the bond yields have been a bit lower in the past 3-4 weeks. Effectively, equities are yielding as much as bonds. Historically, over the last 3 decades, that's been a harbinger of fairly pedestrian returns over the next 12 months.
We can debate the economy and tariffs, but the starting point is that valuations for equities (particularly those south of the border) are expensive.
Absolutely. Valuations are a terrible indicator of short-term returns, but a very good indicator of long-term returns. In the short term, the market's a popularity contest. That contest can go on for a very long time.
If we go back to the tech bubble in the 1990s, Greenspan talked about "rational exuberance" in 1996 and the market didn't peak until almost 2000.
We're less than 2 weeks away from July 9, which is the 90-day reprieve from "liberation day". Who knows what will happen then? He has no idea how you strike trade deals in 2 weeks. There will be continued noise and friction within the whole system. We're seeing things slowing down.
He's not one for using what the economy does to predict what the stock market's going to do. It typically works the other way around. But here we are pretty much where we started the year for the S&P. The TSX is up nicely. Starting to feel as though a lot of the good news is baked in, so perhaps we might just pause for breath.
Initial reactions by markets to tariffs were very spiky. But we've gotten used to them now. Yes, some businesses will be impacted. But investors tend to think longer term. At some point we'll come through this and get on with our lives.
Forget what you paid for something, as that's anchoring to the past. Loves the products, they're spookily clever. But the PE is 200x, so you have to believe that growth continues for 10-20 years without competition or economic slowdown. Be mindful of position size, given the valuation. Businesses can compress their multiples quite easily, without the news getting bad.
He'd take more than a little off the table.
Hard not to like. Great job on e-commerce, after having lagged. Now has a lovely hybrid model of in-store and online. Very price competitive. Well-positioned structurally for the long term. Massive importer of goods, so tariffs are a pressure. Valuation's not cheap, but it never is. Buy and forget about it.
In his firm's Canadian dividend growth strategy portfolio. Not a great dividend, though it does grow. Focused more on inorganic growth and share buybacks. Almost AMZN-proof, scale gives them buying power. In Canada, topline is growing close to 10%, margins are improving. Trades at over 40x next year's earnings, so wise to trim.
Used to make 75% gross margins, but those have jumped to 90%. If it goes back to historic gross margins, even if sales continue, you'll see a huge degradation in profit. Sweet spot in terms of demand. Market thinks it can do no wrong. Worries that demand will abate or just normalize. Good news is baked in. Watch your position size.
(Note the short timeframe.) There's almost a domicile discount because it's a UK company. Big discount to SYK despite being almost as good a business. Chart drops explained by management changes and increased R&D spend, but seems to have recovered from those bumps.
Didn't care for its bid to acquire Seven & I, so they sold. This could be one deal too many; could indeed be game-changing, but not in the way investors hope. They'd have to issue massive equity, take on massive debt, with integration risks.
If it walked away from the deal, he might be interested again.
