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There are 3 things in life that we can count on, death, taxes and garbage. Garbage is not going to go out of fashion. During the recession there was less of it as people were manufacturing less and this company suffered a little. But now, in the last 2 years, volumes have picked back up and the stock price has picked back up. He is still buying it for clients. Thinks there is room for the company to grow, both by acquisition and by organic growth. Also feels there is room for the dividend to grow. He is buying this primarily for growth, not income.
Doesn’t know why this has gone up. Gas inventories have come down because it has been so cold in North America and all the natural gas companies got a bit of a headwind. This company famously sells a lot of its gas forward so it is unclear whether it makes a whole lot of money when the spot price goes up like this. The problem is, there is too much gas and until someone builds a world-class LNG facility to get rid of some of the gas, there is going to be a surplus in North America. Sold his holdings over 5 years ago. You are much better off with oil.
Had terrible earnings and the stock dropped 15% or so. Announced they are closing a bunch of stores and are increasingly trying to sell things on line. The problem with going head to head with Amazon (AMZN-Q) online is that Amazon seems to have an unlimited ability to sell things at a loss. This company is not going out of business. They made a lot of money, just not as much as people wanted them to. He owns, but thinks his time as an owner is coming to a close. When companies have bad earnings, there is frequently an emotion in the market to have a big selloff, but if you look 6 weeks later, infrequently half of that loss is recaptured.
An absolute profit juggernaut. Makes more money in a year than, he believes, all 6 Canadian banks put together. It is going to make an absolute fortune with the flood of IPOs that we are seeing right now. Thinks they have put most of their legal and regulatory woes behind them, which means that the drag on profits from the fines is over. All the US banks took tremendous reserve hits after the housing bubble because all of the houses had no equity or equity inadequacy to justify the mortgage. Every month that house prices go up in the US, currently up about 12% year-over-year, we are seeing most homeowners coming back into the black.
(A Top Pick Feb 19/13. Up 5.02%.) People say that REITs all have a lot of debt on their mortgages and are eventually going to have to roll over those mortgages and what happens when interest rates go up and they have to remortgage at higher rates, which will cost them money. This would not be much different than where we are now. When you have normalized interest rates, and you have inflation, there is the ability to increase your lease rates. Vacancy rates are very low and rents are stable to rising. This company has a particular strategy that he likes. They will build a 2 purpose building, lease it for 20 years and mortgage it for 20 years and they lock in a spread. Because of this, there occupancy rate is very, very consistently high over 99%. Yield of 6.08%.
Good company and doesn’t have anything bad to say about it. He was in oil field services quite heavily during the last petro boom. The problem is, it is very, very cyclical. When the cycle turns against it, it turns fast. You have to be able to stomach that kind of volatility. Prefers the producers. (See Top Picks.)
The good news for the uranium sector is that Japan is going back to nuclear. The good news for the people of Japan is that radiation levels in Tokyo right now are less than in Paris. This company requires nuclear reactors to be built sooner or later. Has an existing business of refuelling existing reactors. Decommissioning nuclear plants is hugely problematic, burying spent energy is hugely problematic and mining uranium is hard work. This company has had a lot of problems getting it out of the ground. Feels it is overvalued. Uranium Participation (U-T) might be a smarter play.
Largest Caterpillar (CAT-N) reseller globally. Has sort of waxed and waned with the global mining industry. When base metals are hot, this company is hot. Has done better this year, but looking at a few years, when mining cooled off this cooled off and is now just getting back where it was 3 or 4 years ago. Very well managed. Terrific franchise.
The main input for methanol is natural gas, which is in ample supply globally. The main use for methanol is industrial chemicals. Demand for industrial chemicals is driven in part by the auto industry, for plastics, etc. Perfect conditions for them, high demand and low input costs. P/E for this company is not outrageous. He sees continued demand for industrial chemicals. Thinks this can stay in the sweet spot for another couple of years. 1.1% yield and he thinks there is now room for a dividend increase and a share buyback.
One of the things that puzzle people when they look at Canada is that why are Canadians prepared to pay so much to own mutual funds. Highest management expense ratio in the developed world. Fund industry in Canada had a couple of lousy years when they couldn’t sell new product. People were traumatized after the stock market crash of 2008-2009. Now all of a sudden, people are buying new funds and not as worried about the stock market. A lot missed the class of “Buy Low and Sell High”. Doesn’t think it is an outrageous price right now.
Canadian REITs are trading at very attractive prices with very high current yields. In particular, he likes H&R (HR.UN-T) for industrial, RioCan (REI.UN-T) for retail and True North Apartments (TN.UN-T) for residential.