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Had a huge disappointment on one of their drug trials. The business is all about the pipeline. Every major drug company is having trouble coming up with great new drug ideas. What they are doing is cutting back on R&D spending. Thinks this still has some downside. Would be looking at this after another 15% drop in the share price. The dividend is secure.
One of the largest South Korean banks, and is tied to the South Korean economy, which was suffering from the financial crisis, but has really recovered. It is driven by massive companies like Samsung, LG, Hyundai, Kia, etc. This stock is incredibly well entrenched, trading at a more than reasonable multiple. He is looking for significant earnings growth for the next few years. Offers significant growth at a more than reasonable price. Dividend yield of 2.55%.
The whole insurance/financial sector is suffering from near zero interest rates. This is incredibly well positioned in Asia and the US. Feels the shares truly have a 50% appreciation over the next 3 years or so. Expects to see dividend increases next year. All the policies written today, are based on very low interest rates. They have cleaned themselves up after the financial crisis, and it is a cheap stock.
(A Top Pick Oct 5/15. Up 18.57%.) He still loves this. Has $40 billion of net cash, and is throwing off $10 billion a year of free cash flow. They are buying back shares all the time and will probably be raising dividend by 10% a year for years to come. They are #1 in the world in their 4 major businesses, all of which are growth businesses. Still generating revenue growth, even with a strong US$, which is not an easy thing to do. Revenues per share is still rising. EPS is in the 7%-10% range for the next several years out. Have phenomenal franchises and are a free cash flow generator. Selling at a pretty cheap multiple, especially after Xing out the cash.
(A Top Pick Oct 5/15. Up 31.92%.) This was famous for fibre optics, and now they are famous for making Gorilla Glass for the iPhone, TVs, etc. This came back after the whole .com thing. They always stuck with their businesses. Just sold their holding in Dow Corning for almost $5 billion, and are sitting with a ton of cash. Buying back massive amounts of stock. Earnings are growing at double digits. Huge free cash flow and is extremely cheap. Thinks the stock is worth about $30 a share.
(A Top Pick Oct 5/15. Down 17.27%.) The only European bank that is problem free. They are in 2 countries that we never read about, the Netherlands and Belgian. It is a retail bank, not an investment bank. Just came out with another fantastic quarter. The stock is selling at less than 10X earnings. A pristine bank with zero problems. Dividend yield of 6%, but it is sustainable. This is getting hammered with a whole European banking sector.
This has a planned merger with DuPont (DD-N), probably later this year or early next. These are both trading as if they are already a merged entity. He is of mixed feelings. There will be a bunch of cost cutting, which should boost earnings in the short term. Integrating these behemoth companies is never an easy task.
This is, in a large part, dependent on the commodity price. It used to be an income trust, and has always been a pretty well run company. He doesn’t own the Canadian energy sector, and is not a huge fan of the natural gas side. There is so much gas around, that it is hard to see gas prices rising much from here. No one is making much money at these prices. Costs and environmental costs keep going up.
The printing business has amazing cash flow. Margins on colour ink cartridges are massive. This is trading at a ridiculous multiple, probably 6 or 7 times earnings. There is no question that there will be some revenue decline for the next couple of years. Thinks there will be a lot of shareholder value created here.
Canadian banks. They’ve done a phenomenal job. Canadian rules make it tougher for them to lever themselves up as much as other global banks. They are all very tied to the Canadian retail sector. If the housing market ever softens, in Toronto or Vancouver, there is room for earnings to soften a little, and probably giving a better entry point.
He is looking at this, as it is the only really retail UK bank. The only play on the UK mortgage market, and the shares are very, very cheap. They got hammered with BREXIT, and suffered with the financial crisis. If BREXIT does happen, it suddenly turns a lot of the home loans sour, which never ends well. He is currently assessing the risk. There is no visibility here, which he likes, because often times it can lead to great opportunities.
Glaxo Smith (GSK-N) or BMW (BMW-GR)? Two entirely different companies. A global drug company and an automobile company. This is going to be more of a somewhat stable profit and dividend payer. The drug companies all have phenomenal cash flows. To him, there are better places to look for value.
