Opinions by Michael Sprung | StockChase
3270
Michael Sprung

President

ON STOCKCHASE SINCE Oct 2000

Sprung Investment Management
25 Adelaide Street East, Suite 500Toronto, ONM5C 3A1
T: 416-934-7160 msprung@sprunginvestment.com
http://www.sprunginvestment.com/


Opinions by Michael Sprung


Signal Opinion Expert Chart

2017-10-25

COMMENT
A Comment -- General Comments From an Expert 

Inflation and Raising Interest Rates. The Bank of Canada has been talking about recovery and strength but we haven’t seen any real inflation yet. Unless they can maintain the momentum of the current recovery he doesn’t believe they will be in too much of a hurry to raise interest rates.

Michael Sprung

President, Sprung Investment Management

Price: $0.020
Owned: Unknown

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2017-10-25

COMMENT
A Comment -- General Comments From an Expert 

Impact of Interest Rates on the Financial Sector. There is already a little bit of expectation built on the price of interest-sensitive stocks. He is not too worried. A lot of those stocks have fairly good yields, and if we don’t see interest rates rise on the fixed income side, people are going to stay on the equity side. Also we’ve seen the banks investing a lot into IT lately, so don't be surprised to see some cost cutting coming down the road on that side. We could see some efficiency gains and cost-cutting that would offset the lack of growth on net interest margins.

Michael Sprung

President, Sprung Investment Management

Price: $0.020
Owned: Unknown

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2017-10-25

COMMENT
A Comment -- General Comments From an Expert 

Consumer Staples or Discretionary? He prefers staples, we’re seeing some sign of distress in the discretionary sector, particularly, retail is struggling right now not knowing what impacts the technological changes happening in the sector are going to have. You’re less vulnerable with consumer staples, although they have their own problems, notably, wage increases coming in in Ontario and other provinces.

Michael Sprung

President, Sprung Investment Management

Price: $0.020
Owned: Unknown

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2017-10-25

PAST TOP PICK
Alaris Royalty (AD-T)

(A Top Pick Dec 21/16. Down 5.77%) The last two years have been difficult. A lot of that is behind them now. They’ve recently made some large investments and he expects to see good results over the next year. The stock is still depressed and he expects to see fairly significant dividend increase going forward.

Financial Services
Michael Sprung

President, Sprung Investment Management

Price: $20.900
Owned: Yes

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2017-10-25

PAST TOP PICK
AGT Food & Ingredients (AGT-T)

(A Top Pick Dec 21/16. Down 41%) There has been some problems with shipments but also the quality of the crops. This has been a very disappointing stock, but we’re close to the bottom now. You have to look at the fundamentals. The company is well managed, financially it’s doing okay and the debt picture isn’t as bad as people perceive. They are in a growing market and are expanding into food ingredients and pet foods, etc. Down the road this could be an acquisition target for some of the larger global food companies.

agriculture
Michael Sprung

President, Sprung Investment Management

Price: $20.500
Owned: Yes

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2017-10-25

TOP PICK
Aecon Group Inc (ARE-T)

They are very well positioned to take advantage of more public infrastructure spending. They were looking at selling the company a while ago, but if it were to be sold, it would be closer to $20 than where it’s trading today.

contractors
Michael Sprung

President, Sprung Investment Management

Price: $16.520
Owned: Yes

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2017-10-25

PAST TOP PICK
Arc Resources Ltd (ARX-T)

(A Top Pick Dec 21/16. Down 31.7%) A lot of the gas related stocks have been hit hard recently. The key in the gas and oil sector is to buy stocks that are well financed that can take advantage of opportunities on the market. He thinks we will see better results in the future and in the meantime you get a 3% dividend.

oil/gas
Michael Sprung

President, Sprung Investment Management

Price: $15.210
Owned: Yes

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2017-10-25

DON'T BUY
BCE Inc. (BCE-T)

Still the dominant player in the market, although Telus (T-T) has done very well in the last few years. The big margins seem to be in wireless. He’s a little concerned about the telecom industry as a whole, except for wireless. BCE is still spending a lot of money and facing a lot of competition on the Internet side. On a valuation basis he’d be looking more at Telus.

telephone utilities
Michael Sprung

President, Sprung Investment Management

Price: $59.310
Owned: Unknown

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2017-10-25

DON'T BUY
Bank of Montreal (BMO-T)

He doesn’t own BMO, he prefers Scotia (BNS-T), Royal (RY-T) and CIBC (CM-T). The one lagging in valuation lately is probably CIBC. Some banks are expanding in the US which is a very competitive market, and it could take several years before you start seeing any significant gains to the bottom line.

banks
Michael Sprung

President, Sprung Investment Management

Price: $99.520
Owned: No

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2017-10-25

BUY
Baytex Energy Corp (BTE-T)

Recently started to show up on his radar. Got hit with the rest of natural gas stocks but it’s been around for a long time and very well managed. They own other stocks in this sector but would consider this one.

oil/gas
Michael Sprung

President, Sprung Investment Management

Price: $3.020
Owned: No

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2017-10-25

DON'T BUY
Constellation Software Inc. (CSU-T)

A very successfully run company. They’ve been very successful with their acquisitions. In term of a technology company they’ve done very well. From a value investor perspective the multiple is a little out of reach. Feels it could be very vulnerable to a significant downturn in the market and wouldn’t recommend buying at this point.

computer software/processing
Michael Sprung

President, Sprung Investment Management

Price: $754.810
Owned: No

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2017-10-25

BUY
Enbridge (ENB-T)

They seem to be executing fairly well to increase their capital base. They are going to have more sources of income going forward with a target of significant compound growth rate in earnings and dividends over the next 3 to 5 years. Recent setbacks were more of an opportunity than a sign of worst things to come. If they continue executing well he thinks we could see an appreciation in the 20-25% range in the next 5 years.

oil/gas pipelines
Michael Sprung

President, Sprung Investment Management

Price: $48.630
Owned: Unknown

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2017-10-25

DON'T BUY
Gildan Activewear Inc. (GIL-T)

The market they are in is getting very competitive. It’s been a well managed company over the years, but it hasn’t shown up on his screen as being particularly value-oriented at this point.

household goods
Michael Sprung

President, Sprung Investment Management

Price: $39.920
Owned: No

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2017-10-25

BUY
Hudbay Minerals Inc. (HBM-T)

Over the last years they developed some significant mines that are now contributing to their bottom line. The stock was punished not too long ago after doing an issue around $10.10. We’ve got to see improvements in earnings and cash flow now. Probably one of the best risk/reward company you can buy in the materials sector at this time.

precious metals
Michael Sprung

President, Sprung Investment Management

Price: $9.770
Owned: Unknown

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2017-10-25

BUY on WEAKNESS
National Bank of Canada (NA-T)

They used to be a more Quebec-centric bank but did some significant investments in Western Canada in the last few years. Usually sells at discount to the other big banks but now trades more in-line. He doesn’t see any compelling reason to buy at this point, at the right price he would consider it.

banks
Michael Sprung

President, Sprung Investment Management

Price: $62.100
Owned: No

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2017-10-25

SPECULATIVE BUY
Precision Drilling (PD-T)

He was surprised to see the stock go under 3$ a share. Precision is the dominant drilling company in Canada, they’ve spent a lot of money in the last few years to upgrade technology. It’s very cheap at this price however it’s probably one you would treat as a high risk/ reward and he wouldn’t take a big position, but it’s one that could be significantly higher in a few years.

oil/gas field services
Michael Sprung

President, Sprung Investment Management

Price: $2.970
Owned: Unknown

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2017-10-25

WATCH
Pembina Pipeline Corp (PPL-T)

He sees their acquisition of Veresen very favorably and thinks that it really extends their base to grow earnings. He would consider taking a closer look, but still thinks none of the pipeline companies are cheap right now.

pipelines
Michael Sprung

President, Sprung Investment Management

Price: $40.720
Owned: No

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2017-10-25

HOLD
Royal Bank (RY-T)

It is one of his principal holdings in the financial services sector. We’ve seen all the banks doing fairly well recently and Royal Bank looks more expensive than the others now. If he was investing in banks today he might look elsewhere. You need to look at dividend growth. We could see a setback in the prices of the banks should the market have a precipitous fall.

banks
Michael Sprung

President, Sprung Investment Management

Price: $100.260
Owned: Yes

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2017-10-25

TOP PICK
Sun Life Financial Inc (SLF-T)

Generally in rising interest environments, insurance companies do pretty well. He also owns Manulife which has outperformed Sun Life in the last couple years, mainly due to the stumbles in their MFS subsidiary in the US. The situation with MFS should improve now and expects to see Asset Under Management increase. Not too concerned about fees contraction as he thinks this one has been doing a good job controlling costs. Expects to see much better results and growth coming from their Asian activities and a dividend increase soon.

insurance
Michael Sprung

President, Sprung Investment Management

Price: $50.440
Owned: Yes

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2017-10-25

SPECULATIVE BUY
Stuart Olson Inc (SOX-T)

They were losing money a few years ago because of fixed price contracts. Now they have diversified into more electrical, construction and buildings. Mostly an Alberta dominant company and they had a lot of exposure to gas & oil which hasn’t helped them. It’s a higher risk/reward situation but it could go up significantly if the infrastructure spending gets off the ground.

REAL ESTATE
Michael Sprung

President, Sprung Investment Management

Price: $5.270
Owned: Yes

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2017-10-25

TOP PICK
Suncor Energy Inc (SU-T)

In the current environment you want to play safe, with good quality and long term assets. Has a very strong balance sheet and limited downside risk.

integrated oils
Michael Sprung

President, Sprung Investment Management

Price: $42.150
Owned: Unknown

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2017-10-25

DON'T BUY
Teck Resources Ltd. (B) (TECK.B-T)

They have done very well in the last year or two. They used to be really a Zinc / Copper company but now they are more dependent on Coal which he doesn’t like. In terms of P/E it doesn’t look bad, but you have to think that the time to buy these resources stocks is often when the P/E is very high hoping for a cyclical recovery, and sell when the P/E is getting low. If he wanted exposure to metals he would be looking at other companies. Activity coming from China has been moving prices up recently but he doesn’t see this as being a continuing trend. China usually builds large inventories then lets prices drop and come in again at lower prices. Sold their holdings some months ago.

precious metals
Michael Sprung

President, Sprung Investment Management

Price: $29.280
Owned: No

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2017-09-13

N/A
A Comment -- General Comments From an Expert 

Market. There are some risks in the market right now, but they have been building for some time. We’ve had a long run of good markets without any significant pullback. No one ever knows where or when or why it is going to happen. You watch valuations and things begin to look a little more expensive, and it is harder to find things you are comfortable buying. Over the last 6-8 months, he has been a net seller as opposed to a buyer. Cash positions are building a little. It is probably prudent at this time in the cycle to have some cash on the sidelines in case you do see some sort of significant pullback, whether it is set off by a geopolitical event, an economic event.

Michael Sprung

President, Sprung Investment Management

Price: $0.020
Owned: _N/A

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2017-09-13

COMMENT
A Comment -- General Comments From an Expert 

An ETF of Canadian large caps with a proven track record and growing dividends for an RESP? With a managed ETF, you are going to get a little more diversification. You could also do this by selecting a couple of sector ETF’s, and putting them together as sort of a complement. He would tend to do this with 2 or 3 different ETF’s, such as some that are exposed to Canadian financials, and then buying one that is partially exposed to some energy, and partially to some industrial.

Michael Sprung

President, Sprung Investment Management

Price: $0.020
Owned: Unknown

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2017-09-13

SELL
Air Canada (AC-T)

Hurricanes cause a disruption of services, but it is going to be temporary. You have to look at the bigger picture. Airlines appear to be facing more and more competition. Has always been wary of airline stocks as you are dealing with extremely expensive aircraft and largely unionized employees and a very competitive environment for price setting. Airlines have had a good run over the last while, and if he owned any, he would be taking profits.

Transportation
Michael Sprung

President, Sprung Investment Management

Price: $23.590
Owned: No

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2017-09-13

TOP PICK
Alaris Royalty (AD-T)

Over the last 2 years, this company has had its share of setbacks, but most of that seems to be getting worked through. Recently one of the companies that provided a large chunk of their cash flow has redeemed, and people have been wondering what they are going to do. They’ve made the largest capital deployment in their history with the Sales Benchmark Index, which is a large consulting firm. That is going to go a long way. The key is that they put money into private businesses at a certain rate and then pay the dividends through to shareholders at a slightly lesser rate. Feels we are now going back on a path where there are going to be dividend increases going forward. Dividend yield of 7.7%. (Analysts’ price target is $24.)

Financial Services
Michael Sprung

President, Sprung Investment Management

Price: $20.930
Owned: Yes

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2017-09-13

BUY
Brookfield Asset Management (A) (BAM.A-T)

Over the years, this is proven to be an extremely astute investor. They have diversified into a lot of industries. Also, they are very good players within private equity markets. With this, you have to be a long-term player, but you can count on management liking to participate in capital gains and dividends over time.

management/diversified
Michael Sprung

President, Sprung Investment Management

Price: $47.770
Owned: Unknown

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2017-09-13

COMMENT
BCE Inc. (BCE-T)

Out of all the Canadian telecoms, he primarily looks at this one. They’ve always had the advantage of having the grandfather position in Canada. Lately, they’ve been changing their model a bit and going more to wireless, with less dependence on their wire line offerings. Also, the provision of Internet services is becoming a bigger and bigger thing. We are seeing a huge movement in the industry to Internet protocol, whether TV, telephone or whatever. This company is going to be one of the primary beneficiaries of that. Feels we may be reaching a plateau with all the telecoms, and he wouldn’t be surprised to see them all pause. Dividend yield of 4.9%.

telephone utilities
Michael Sprung

President, Sprung Investment Management

Price: $58.250
Owned: Unknown

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2017-09-13

COMMENT
Brookfield Infrastucture Partners (BIP.UN-T)

There has been a bit of a pullback. The rationale for a pullback is hard to determine. It might be that people are thinking some of their projects are going to be pushed a little further out. He wouldn’t be concerned about the pullback. If playing this for the dividend, infrastructure is a good place to be. On a macro level, he prefers the more diversified asset management company. Dividend yield of about 5%.

INDUSTRIAL PRODUCTS
Michael Sprung

President, Sprung Investment Management

Price: $51.060
Owned: Unknown

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2017-09-13

COMMENT
Canadian Imperial Bank of Commerce (CM-T)

Probably one of the better capitalized banks, although in the last round of earnings, it fell from being at the very top tier, but it is still very well capitalized. Has a very good dividend which is approaching 5%. On a P/B basis, it is looking like one of the more reasonable priced banks. He likes the combination of a high ROE and low P/B with a prospective growing dividend stream going forward.

banks
Michael Sprung

President, Sprung Investment Management

Price: $107.120
Owned: Yes

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