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POT hit a 52-week high today. The market is expecting a higher bid. BP put in 130. Something will materialize. Potentially a sovereign wealth fund is the most likely acquirer. Thinks you should hang on. BHP doesn’t know what it is facing in the form of mining taxes in Australia. No position in BPH.
integrated mines
BUY
Banking sector as a whole is at an attractive entry point. Credit cycle is working its way through. Capital markets were very strong last year and there are headwinds. We could see them increasing dividends next year. BNS has the most Latin American exposure, which is the biggest growth area. This is not her top pick.
banks
DON'T BUY
Moderately negative on the telecom sector. These guys did a good job of cost cutting and generating free cash flow. Attractive yield. And free cash flow used to increase dividends, so money gravitated here. With increasing competition, she sees limited capital gains. Moderate increases in dividend in the future.
telephone utilities
SELL
Held in the past and sold in the past few months. Going to be rolling out wireless network. Their cap X will be wrapping up to fund that. Always traded at a more attractive multiple because of free cash flow. She put her money elsewhere because she doesn’t see much dividend growth and because they trade at an increased dividend multiple. Would prefer banks for the next few years.
Cable
COMMENT
They are indicating .50 a quarter. They are going to convert at the end of the year. Their strategy will be to pay out according to what oil prices are doing. Distribution will be volatile. Thinks capital spending requirements will increase. Can maintain payout if crude prices go up, otherwise a risk in a cut.
oil
gas
COMMENT
When news came out on new tax, stock corrected. If tax comes into fruition, they have to shift their capital plans. They shifted their focus to potash and this is another leg into their whole portfolio. She respects the portfolio. She would not buy POT instead to get the exposure. It’s late in the game to step into potash.
other mines
DON'T BUY
An attractive entry point. They are getting orders and she likes the infrastructure play. They have lower margins, but will try to bring it up over the next couple of years. Could be FX headwinds because they report in US$. Needs healthy economic environment for jet business to increase. Wants to see more orders for the ‘C’ series.
transportation equip & components
TOP PICK
Has owned for a while and followed them. Stock over reacted to Mark’s departure. Cheaper than it was a year ago. Likes their business divisions. Just reported their quarter and business looks good. Don’t know who their new CEO will be. Bought more when the departure was announced.
electrical
electronic
