Today, Brian Acker, CA and Paul Harris, CFA commented about whether TGT-N, DE-N, BAC-N, MFC-T, PEP-Q, PFE-N, META-Q, JPM-N, C-N, RCI.B-T, FDX-N, GE-N, BA-T, LNF-T, STI-N, V-N, DEO-N, BAM.A-T, WTE-T, F-N, FEZ-N, BNK-T, K-T, BTE-T, ECA-T, SCL-T, CPG-T, HCG-T, MRK-N, EBAY-Q, INTC-Q, MET-N, CSU-T, COS-T, CVX-N, CSCO-Q, C-N, V-N, ATD.B-T, BMO-T, BB-T, BAC-N, SU-T, BDGI-T are stocks to buy or sell.
There are a group of these energy names that pay a distribution way above what they are earning. His model price is $31.42, a negative 21%. They pay a distribution of $2.76. Investors look at 6.78%, but mean estimates in terms of earnings, is $1 and next year it is $0.95. What it means is that they are paying out their capital to investors. Overvalued.
Considers gold stocks as the “canary in the coal mine”. Basically all their balance sheets have been written off. They all did acquisitions at the top of the price of gold, and that went on their balance sheet. After the debacle of the share price coming back in 2013, you are now getting all the write-offs. There was a very unenthusiastic rally in the 1st quarter of this year. Now we are seeing the rollover. He is not seeing anything in his system to give you a “Buy” signal.
He has a model price of $12.40 which is a 130% upside. There has been a positive move in the stock and he has had a positive transit of one of his EBV (Economic Book Value) lines, which is very positive. It will probably hold here for a while, but energy stocks are starting to have some action in them.
Markets. Very comfortable that stocks are going to go up over the next little while. There is always going to be a pullback or something like that and his view is that you should look to buy those things over the next little while. Doesn’t see interest rates going up dramatically. You had margins get to peak levels which people were worried about, but you also had P multiples expand. In order for stocks to go higher, you need to see more revenue growth. He thinks you will because there will be more capital expenditure down the road as people feel a lot more secure about where the economy is going, not only in the US, but in Europe as well. That will lead to some capital expenditure. Most of these companies, because of what happened in 2007-2009 have very good cost structures so he expects to see very reasonable margins go higher as you see capital expenditures and some top line revenue growth.
Have done a very good job of executing. The only auto company that didn’t get help from the US government. What he likes, relative to the others is that they have executed incredibly well. Have some great products coming out. Slowly turning around the difficult parts of their business. Expects you will see some reasonable growth over the next little while, as the US picks up on the economic side. What may have caused a pull back on this stock is that there was some really strong pent-up demand motor vehicles from late 2009 until now and this has sort of tapered off slightly.
One of the great things about this is that it has an unbelievable asset. It is going to be very hard to add another terminal like that on the West Coast. Thinks the stock got overvalued. Has also been hurt by what has happened in China which has affected a lot of resource companies over the last little while, especially in coal. He would look to buy this on a pull back.
Great long-term hold. Very good managers of their business and they understand the business. A holding company and have done a very good job of narrowing the discount. What some people don’t like is that they have done a little bit of financial engineering, so you have to believe that they are doing it fairly. Some great organic growth in the areas they are talking about, whether on the property side or the infrastructure side. Thinks there is going to be a lot of growth in infrastructure business and they will be able to buy some really great assets, especially as governments need to sell off a lot of assets.
Huge value in these names. Maybe we get a normal market where money actually stays in the market, but it rotates through value. Model price is $37.73, a 50% upside to its current price. 3.4% dividend yield.