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Has executed very well in the past with their acquisition strategy. However, it is quite expensive. It is classified as a material stock on the TSX, and many investors who don’t like mining but need to be invested in all sectors, have picked this one, which has driven up the valuation to a very high level. 1% dividend yield.
This has been stuck in a range lately. There were some concerns about fuel volumes in Western Canada, and also in North Dakota where they have a growing business. Recently made a nice acquisition of some fuel stations from Imperial Oil (IMO-T). They are becoming more of a retail fuel station operator, than a wholesale reseller of fuel. That should gather a higher multiple. You may see an acquisition in the next few months, that will probably come with an equity issue. That would be a great way to increase your position. Dividend yield of 5% is fairly sustainable.
Thinks the dual-class share structure is part of the reason for the stock’s decline over the past 2-3 months. But also, many people have been buying the stock for exposure to gas margins, which have been very strong in the past year. Now people are starting to be concerned about a reversal of fuel margins, which would impact this company negatively. A very solid company with their acquisition strategy and their execution of it. If it gets down to $50-$51, that would be a great bargain.
He likes this company. They run a very special kind of office space by taking industrial buildings and turning them into offices that look a little like a loft with an open space aspect. It’s difficult to evaluate, because it is not the traditional office space. They have been pretty good at executing a strategy of redevelopment and intensification, and currently have a couple of very interesting projects that will derive cash flow growth in the future. Facing some headwinds near term, because of vacancies. In the last few quarters those vacancies have offset the development growth they have been having. If you see a strengthening in their occupancy rate, then you could consider this as being higher growth. He definitely likes this one. 4% dividend.
An energy service company, and he is concerned at this point for all energy service companies, and would avoid most of them. The activity you are seeing right now in Canada is quite weak. At one point there were only 11 active rigs in Q1, the lowest level that has ever been seen since they were being measured. Activity in Q2 looks like it is going to be weak as well.
A pretty defensive stock, almost a bond proxy. A very stable, regulated utility in Ontario. Growth that can be expected is much lower than what you can get typically, so you are looking at a GDP type rate base growth. They also have a strategy of acquiring smaller utilities across Ontario. He would buy this if you are looking for very, very low risk and volatility. Just clipping dividends with a little bit of growth over time. 3.5% dividend yield.
Reasonably cheap. The multiples are in the mid-single digits on EBITDA. Even the PE is quite low. The concern is US car sales, which have been very strong in the past few years, but now toppy and looking like they have reached the maximum and the recovery is over. There is concern they will roll over. It could be interesting because they have a couple of new programs with car manufacturers that are coming online in the next few quarters. That could drive revenue growth on top of the natural growth. From that perspective, this could be interesting to own.
The potash market is over supplied right now, especially following the breakup of the cartel in Russia, so pricing is really weak. This is impacting the company, because they are at the higher end of the cost and their margins are compressing. Although the dividend looks attractive, he thinks it is not sustainable at this level.
There is a lot of pressure on their portfolio. They have exposure to Calgary, and that market is weak, not only because of oil, but also there was a lot of new supply coming in. When new supply is coming onto the market on the office side, they tend to lease very well because it is brand-new and looks good, so older buildings tend to perform poorly. That has been impacting this company. There is a lot of value in the name. It is trading at a huge discount to NAV. For a long-term investor who thinks things are going to recover, this could be a good buy, but he sees a lot of risks. Dividend is greater than 7%, but he thinks they will try to hang onto it.
US banks are very sensitive to the economic situation. If there is some disappointment, they will be at the forefront. Went down a lot in Q1 this year. He is quite concerned about being exposed to US banks at this point. However, if the Fed surprises the market in June and hikes rates, the place you want to be is in US banks.
Emera (EMA-T) is selling most of its interest. This will take an overhang off the table and will improve liquidity of this company’s stock. The company is definitely safe, and will probably keep growing over the next few years at a pretty nice clip. Given the nature of their business, he thinks they can sustain their debt level.
They sell telephone towers, mostly in the US, but globally as well. The company is growing quite nicely. Cash flow growth is at 15%+ in the next few years, and that will drive very solid dividend growth. Very low risk because it is long-term contracts. There is nice structural growth in the industry because some countries are moving from 2G to 3G, etc. That drives more demand for space on their towers.
Great company. They are deriving growth all over the planet. They will deploy capital in places where things are bad and capital is fleeing. That is how they get assets at a discount to fair value, and how they generate growth. The assets they buy often come with long-term contracts providing stable and growing cash flows. Also, have organic growth investment opportunities. Currently they are interested in Brazil, where the economy is pretty bad. 5.2% dividend yield.
Market. He is looking at a stock market environment where uncertainty remains elevated. The Canadian and US markets have rebounded quite a bit from the lows of February. The US earning season for Q1 was a little lacklustre, and guidance was a little disappointing. At the same time, you have the market back to its valuation peak at 17X for the S&P 500. Even if you adjust for currency, the results were a little lacklustre. Looking at the current EPS consensus for 2016, it is back at the same level as 2015. He is looking for companies that are offering the best of both worlds, a decent dividend and the prospect of decent growth, but where the company’s business prospect and growth is not influenced by the macro environment. That gives him more visibility and more comfort.