Latest Stock Buy or Sell? Make More Informed Decisions!

Microsoft has just purchased LinkedIn (LNKD-N). If they can incorporate this into Microsoft Dynamics and CRM, with the ability of business to talk to business, there are definitely some synergies. Looks like the market doesn’t like this acquisition. Chart shows a pretty significant price gap in 2015, and since then has traded in the range between $50 and $55. If it breaks down much below $50, it would trigger a pretty important technical breakdown, that would target something around $40. If this doesn’t hold the $50 area, there could be trouble.

Elliott wave theory. Not a big proponent of this. It is only after the fact that we can we evaluate whether it worked or didn’t. The conclusion is that nothing works all the time, and it is about managing risks.

Likes this as a diversifier. You have about 22% of preferreds, 11% of corporate bonds, all of the banks and a lot of financials, some of the big dividend payers in Canada. It isn’t diversified much beyond financials, so there is a lot of sector concentration. If you are going to put this in your portfolio, and it is 10%-20%, he would be good with that. Make it a core holding. Valuation-wise right now, he doesn’t like financials. Thinks they underperform for the next year or 2.

The correlation with this bank and energy prices, etc. is what this bank is all about. It is a proxy for Shorting the energy sector. He doesn’t like this one at this time. Expects oil to hit $40 before it hit $60, and therefore potential weakness. Can see a probable 10% downside, at which point he would think about buying if you want a longer-term play on the recovery story of Fort McKenzie.

In the short run, it looks like it is rolling over. There was a lot of support in the last couple of months at around $39-$40, and is being broken today in a big way. The next area of support would come in close to the $30 area. There is probably some downside risk in the next while. In the lower $30, it would be something you would want to accumulate again. He would think about lightening up on the current strength.

Consumer staples? Portfolio managers have to stay fully invested, and want to get defensive if they think markets are going to pull back. They go into lower volatility names like utilities, some healthcare like big Pharma (if they are not too expensive), and consumer staples. You could use SPDR Consumer Staples (XLP-N) in the US or iShares S&P/TSX Cap Consumer Staples (XST-T) in Canada. Alimentation Couche Tard (ATD.B-T), Loblaw’s (L-T) and Metro (MRU-T) are the big weights in the latter. These are more defensive and likely to fall a bit less when markets correct, but not likely to go up when markets go down.

BMO Covered Call Cdn Banks (ZWB-T) or Premium Income Corp (PIC.A-T)? If you want to be in the banks for the next few years, this is probably the better holding.

BMO Covered Call Cdn Banks (ZWB-T) or Premium Income Corp (PIC.A-T)? If you want to be in the banks for the next few years, ZWB is probably the better holding. Doesn’t know much about this one, but it would appear that it uses a significant amount of leverage. With this one, when it is bad like in January or February, it is really bad, probably because of the leverage. Leverage is high risk. 7 years into a Bull cycle is not the time you want to play leverage and high risk.

They have pulled off $1.1 billion in asset sales in Saskatchewan and Alberta, and were upgraded by a number of analysts. Raymond James to $3 and BNS to $2.25. There is probably some additional upside looking out over the next year. However, there are a couple who are neutral to flat with lower price targets. He would suggest you try to read all the stories on why they have their various price targets. The chart shows a tremendous amount of resistance, and he believes in the idea of “lower for longer”. Oil should probably stabilize over the next few years in the $50-$60 range, but by no means whatsoever are we coming back into balance. Inventory levels are massive compared to the 5-10 year averages. Thinks that will be with us for years and years to come. Wouldn’t be a big investor yet, but more inclined to probably Sell into this.

Educational Segment. Downside of negative interest rates. Negative interest rates are really stealing money away from pensioners and savers. Did a little heat map of the term structure of interest rates going 2 to 30 years in the various countries. Canada, US and UK still have relatively normal yield curves, although yields are pretty much as low as they have ever been. However, in Europe and Japan you’ve got negative interest rates. There are over $10 trillion of government yields with negative interest rates. Last week the ECB started buying corporate bonds, and there is a good chance that some corporates are going to be able to issue bonds with negative interest rates. He showed a 2006-2016 chart of the total returns of the entire US market comparing the history of stock and bond returns. When stocks go down, bonds are generally the offset. The problem in the pension world going forward is that interest rates are so low that in order to get that balance return of 6%-7%-8%, you have to use stocks, but only if you can handle the ride. The volatility is very, very different. If global bonds are going to yield 1%, in order to get your 7% in a balanced portfolio, you have to get 14%-15% in stocks. Where valuation is today, that is not doable. A passive “buy and hold” portfolio is going to be very challenging.

Markets. When looking at both US and international markets, she is always concerned about valuation. She has a very long-term investing style. Right now, the US equity market is looking a little rich. It has hit all new highs for the S&P 500. Has crossed above $17,500, which is the first time since the 90s. That tells her the markets are very vulnerable to any type of disappointment, whether it is of concerns in Europe or China. Valuations are so high right now because the US is the best house in a bad block. Britain looking to exit the euro can be a big concern for Europe. Europe is looking for a big earnings contraction this year, and are not expected to have growth until the 4^th quarter this year, if they are lucky.

Even though this is consumer discretionary with a lot of those names struggling, because of their customer base tending to be well off, she sees this doing well and being less hit by any type of contraction of the overall market. Right now they look to be of pretty good value. Could see a possible 15%-20% upside over the next year.

Likes healthcare in general. It has some of the highest growth rates and tends to be trading at lower valuations. This is one of those companies. Have had some very good acquisitions, and valuations are attractive. This would be a long-term, safe, more defensive, and in one of the best sectors. Good management. 3.5% dividend yield.

Has been really good at changing their balance sheet, getting rid of bad debt and adding on new loans that are safer. Have also been getting fees from non-interest rate types of operations, such as card fees. All interest bearing revenues in this low interest rate environment, are going to be more challenging. It also has that Libor suit hanging over it right now. However, she feels that suit represents somewhat of a buying opportunity, because the actual liability they may have, even if they lose, is actually pretty small. Dividend yield of 1.5%.

Has been able to create mobile revenues, one quarter after another. Trading somewhat richly, but given their history of being able to execute on their plans, she likes it here.