Has been an interesting month because the things that made people money over the last 8-9 months really ran into a wall at the end of April, in Canada first and then other markets at the beginning of May. Has been a significant rotation away from mid-cap and small-cap to large cap that had a more stable earnings picture with a continuation of the theme around yield. Slowdown or something else?
Have done a great job. Recent quarter was very good with great growth in revenues and margins better than expected. The one drag would have been cotton prices but they have backed off.
Pulled back in the last month along with the energy complex. Likes energy producers that pay a good yield and have long life assets like this one. Will probably continue to grow their production at 7%-8% for the next 3 years.
In the last month or so, big caps have led the way. The issue with this one is they continue to see very lacklustre revenue growth. You probably won’t get hurt but there are probably better big-cap companies.
Stock took a big drop. He is not a bottom fisher so not interested. Recent earnings have not been very good. There are a lot of retailers doing extremely well so there are better places to focus on.
He has very low exposure to precious metals right now. If they are going to find support, it should be around these levels. This company is basically sitting on top of the 200-day moving average. This is a way for exposure to silver without concerns around rising production costs and has been a business model that has worked over time. He is not ready to step into precious metals yet. Keep your Stops pretty tight if you buy.
Historically you want to own agriculture in the fall and early winter. Spring and summer can be a little bit less attractive. Very strong cash flow. There is a catalyst coming this week with Mosaic (MOS-N) having a big block of shares becoming available. (He is Short on this stock.)
Oil services. Been very strong executionally. Technically held in better than the group which is a positive. But he has seen deteriorating breadth in the sector over the last 6 weeks as money has been rotating out. Issues with this company in the short run 1) potential litigation risks over Gulf oil spill 2) exposure in Saudi and South Africa. On the other hand has lots of good exposure in Brazil. If you want to be in this sector, this is a company you could own.
He has avoided natural gas. His gas exposure has been in liquid rich gas such as Peyto (PEY-T) which looks quite good. There continues to be a tsunami of new gas production coming on stream.
Got stopped out of virtually all his metal stocks through March and into April. At this point there is not enough to tell him that the correction is done.
Lots of business in South America and Europe but he would tend to focus more on the domestic telecoms like Bell (BCE-T) and Telus (T-T) but also owns AT&T (T-N) and Verizon (VZ-N). These companies have gone through pretty good restructuring.
Probably the purest play on pipelines around the oil sands. Have an NGL extraction business (taking liquids out of the gas), conventional pipelines and a bulk storage business. Revenues, cash flows and distributions will continue to grow over the next 3-4 years. 6% yield.
They expect to raise their dividend, perhaps twice a year over the next 3 years. A 10% dividend growth rate. Very strong wireless exposure and have done a good job with it. Have potential to grow their business in the OptiTV, IP based television services.
(A Top Pick May 10/10.) Every year at some point the market goes through some kind of consolidation. Has always found you can afford to be wrong for a month, but can’t afford to be wrong for 6-8 months. You can always redeploy it if things start to improve.