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Stock Opinions by Ross Healy

COMMENT
Markets. Right now, the market has the bit in its teeth. Q3 earnings are excellent. Market's reaching up toward his target of 4.5x book value of 5250. Not an unwarranted target, as that was the precise peak of the stock market in 2000. It may rise as we get more balance sheets in, as numbers are affected by growth in the balance sheets. As the market gets higher, people are getting complacent, especially looking into 2022. That might be one concerning sign. But right now, that's not the case.
Unknown
COMMENT
Canaries in the coal mine. He looks at particular sectors and stocks as his personal canaries. For example, FANG stocks, the leaders since 2009. If they break, it will be all over. AMZN might be the stock to signal the end. In the whole Covid selloff, AMZN barely budged. It warrants attention, as it represents poor value, even if it's holding in.
Unknown
RISKY BUY
Miles and miles ahead of even remotely reasonable value. FMV is 90% below current stock price. Plans for new and refurbished reactors suggests there will be spectacular demand in the future. Pure speculation, but not like Bitcoin. Powerful potential. 2-4% of your portfolio and hold, but don't watch it every day or you'll go nuts.
integrated mines
DON'T BUY
On the balance sheet, 60% is nothing but goodwill, and this concerns him. Cost pressures such as natural gas put pressure on the stock. Global warming suggests farmers want fertilizer to increase production to offset effects of the weather. In the next bear market, balance sheets and the quality of book values will make the difference between survival and wipeout.
agriculture
HOLD
Rails in general are very highly valued because management has increased their efficiencies. FMV is about 22% lower than the current price. It's had a nice bounce. Next technical target is $112. Somewhat speculative now. Management will need to work hard on KSU integration to justify expensive stock price.
Transportation
BUY
Likes it. Stock is very cheap. Discount to book value. Nice yield. One of its businesses is an insurance company, which will do well with interest rate increases. European side has some concerns. Broken out from a key technical point. Nice upside of more than 100%.
mngmnt / diversified
HOLD
Long-term history tells him the current price, though at 5-year price to book high, could be a lot higher. FMV potential is well over 100% above current stock price. Don't sell. Big issue is when will they start paying a dividend, instead of just buying back stock?
investment companies / funds
COMMENT
Stock buybacks. Not a fan when the valuation of a stock is at or around book value. Marginal value to a client is very small, compared to the marginal value of having a dividend. Management should pay the dividend instead.
Unknown
BUY on WEAKNESS
Debt from takeover of Kentucky Power. For the past 10 years, stock's traded between 1.5x and 2x book value. His low target is $16. He wouldn't touch it right now. Balance sheet is not a powerhouse, but utilities don't have to have one, as returns are regulated. He doesn't worry too much about the balance sheet of utilities. Such a beautiful trading pattern, he'd buy at the lows.
electrical utilities
PAST TOP PICK
(A Top Pick Nov 18/20, Up 155%) Still bullish for energy going into 2022. FMV based on 2022 earnings would be another 100% up from here, though not guaranteed of course. Don't sell right now.
oil / gas
PAST TOP PICK
(A Top Pick Nov 18/20, Down 9%) Stock is very cheap. Expanding high-quality reserves. Trading around book value. Might be attractive to an acquirer. Hang in.
precious metals
PAST TOP PICK
(A Top Pick Nov 18/20, Up 39%) Whole outlook for banks in Canada is very positive. Covid reserves are not needed, and they get moved back into earnings. Cheap stock and possibly profound dividend potential when allowed.
banks
DON'T BUY
Has tended to peak out at 4x book value, around $50. Vaccine potential has petered out. FMV potential is 55% higher than current price. More likely to have a further setback, with $37-38 as his downside target. The stock's already given at the office and it's not prepared to give at home.
biotechnology / pharmaceutical
DON'T BUY
US government stopped its line. Overhang of negativity. Upside potential is 25-26% from here. What's the fundamental underlying trend of book value? With TRP, it's been up and flattening. No overwhelming urge to get in. Trading right up at one of its resistance targets of $67.50. Be very careful. If it busts out, look for $84-85, but no evidence of that happening. Nice yield of 5.2% is not enough to entice him.
oil / gas pipelines
DON'T BUY
A millionaire stock? Vivid imagination. Hasn't made a penny to date. Balance sheet is sloping down, as it's consuming equity. Every time it takes a run, many people run for the exits. Pure speculation, a gamble, fluctuates wildly. Doesn't see the earnings or explosive growth in the Canadian market.
agriculture
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