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Oil. From a long-term perspective, this is undervalued at this time. However, in the short term, there is too much production with more supply than demand. It will correct eventually. The price will likely stay in the $25-$35 range for the next 3-6 months. Eventually this oversupply situation will solve itself. N.A. conventional production is already dropping and some companies are shutting in wells because they can’t make money on an operating basis. When we get to the end of March, there is going to be surprise on the amount of downside in North American production.
Airbus and Boeing are doing their best to cause a lot of problems for the company. They have developed a leading world class new plane in the C Series, a fantastic product. You are likely to see a big order in the next 3-6 months, which will drive the stock upwards. In the meantime, he is sitting on the sidelines and watching.
Royalties of income streams from non-resource companies. The beauty is that it has the appeal of the royalty type structure, but in a non-resource setting. Has had its biggest pullback in a long, long time. Have about a 75% payout ratio, so the dividend is very, very safe. Trading at 13X this year’s earnings and 10X 2017 earnings with about a 7% free cash flow yield. Dividend yield of 6.8%.
One of the 2 biggest health insurers in the US. A great business that has done really well. Stock has pulled back despite the earnings. The dividend continues to grow. Trading at 11X this year’s earnings and 10X next year’s. This is a Buy Back machine having reduced shares outstanding by 57% in the last 9 years. Dividend yield of 1.97%.
