Latest Stock Buy or Sell? Make More Informed Decisions!

Trump thinks they have dominance. It is going to be tough to keep a growth engine like this down. It is bouncing off the trend line. He started buying last week. If it breaks $700 for two to three weeks he would get out again. No Dividend. (Analysts’ Target: $940.46).

Global Market. Markets were pretty flat line until the US president’s election was over, and caught everybody by surprise. Suddenly everything goes haywire. Bond yields are rising overseas, emerging markets are getting crushed, the US$ is rising, Cdn$ is falling, and everybody is scrambling to rotate from one sector to another so that if interest rates are rising, insurance and banks are in favour. People are also rotating out of the sane stocks such as the NASDAQ, Facebook, Amazon, Netflix and Google, back into the infrastructure plays. As a portfolio manager, his play is to have all bases covered, so he is not doing any sector rotation or any big calls one way or another. It is just a matter of being able to manage that correlation risk and concentration risk. He is not going to shoot the lights out, but at the same time he is not going to lose 20%-30% in a year. It keeps investors in the game, so that no matter whatever happens down the road, they are not going to run out of money.

International diversification? Canadian stock market is mostly financials and commodities. When looking at Canadian stocks on the TSX 300, you are going to find very little revenue exposure outside of North America. US companies are much more aggressive, so there is some diversification. Long term studies going back over 20 years has shown international investments have enhanced returns by 1%-2%. He wants to own International stocks so that there is less correlation risk by having multiple currencies in a portfolio. Doesn’t think of companies as to where they are domiciled, but as to where their revenues are coming from. When he can find global companies that are doing 80% of their revenues outside of North America, it gives him the opportunity to diversify further, and reduce the correlation risk.

The share price has come down roughly 45% in the last year, mostly on lack of pricing power in the US. Now that Trump is in power, healthcare stocks have started to turn back to some degree. This company has seen a decline in sales in the US, but they are primarily insulin makers, and have got 51% market share. Where they fall in price, they are going to pick up on volume, because there is still expected to be another 50% increase in type I and type II diabetes over the next 25 years. Because they are no longer the high growth story, the stock has come down and is now trading at a value that is based on 6%-7% revenue growth, which he thinks is fairly valued right now. They have no debt and are going to start to diversify away from the step-by-step insulin, into kidney and liver disease. The dividend has plenty of room to grow.

Canadian banks are trading at a PE of anywhere from 10 to 13 times, yielding close to 4%. With Trump, if tax rates go down, it is going to benefit this bank to a huge degree, in step with Royal (RY-T), because they have the biggest operations in the US. It will also help CIBC (CM-T) and Bank of Montréal (BMO-T). From a risk standpoint, Canadian banks are still holding up pretty well. Leverage isn’t overly excessive, compared to European banks. This bank just raised their variable rate mortgages to deal with what the federal government is throwing at them of almost having to put up a bond indenture against CMHC risks. He would buy a half position to start, and then see what happens.

The Trump victory throws things wide open, because if they get to repatriate some of their overseas capital, that could give them the opportunity to allocate cash to shareholders. Not a big fan as he thinks they have already hit their plateau, and their innovation is just one iPhone after another.

The problem is that they just sell mutual funds and are under huge duress right now to be able to do something more than just that. Expects they will come out with a brand of ETF’s. Net outflows are continuing. It is not a good time to be a mutual fund company. When CRM2 regulations come out, people will start to see exactly what they are paying in fees, which are much, much higher than ETF’s. 6.4% dividend yield.

(A Top Pick Aug 25/16. Down 4.18%.) Fund stores through the US and Mexico through Cash America and First Cash Financial. They’ve also started building some pawnshops in Colombia, as well as looking at Chili and Peru. Because Mexico does not have great banking services, pawnshops actually do quite well. This has pretty much been tracking the price of gold. Rather than tracking the gold producers, their balance sheet has been a whole lot better. Dividend has been rising on an escalating scale in double digits, and they just continue to build out their stores. The response has been good because they are in areas where banking has not been great.

(A Top Pick Aug 25/16. Down 15.76%.) This got hurt, because they were $.01 short on earnings. The stock is down 25%-30% year-to-date. They make enzymes for pods for detergents, which can be used in cold water and doesn’t require as much detergent and is less pollutant. This has been hurt, because corn prices are down and farmers are not buying enzymes to produce ethanol. 2 years from now, they are going to have new enzymes for clothing that deals with hygiene and odour, a step up from the current pods. They are also doing enzymes for biofuel. There is a new plant being built in Britain to deal with landfill. He still likes this and has been buying more.

(A Top Pick Aug 25/16. Down 6.51%.) This should work perfectly with a Trump government. They do all of the payroll processing, HR, 401K plans. They are really sticking with small businesses of 15 employees or less. Infrastructure and growth in the US is really going to start with the small businesses. This is really a cash cow.

He believes in this firm. Now that Trump is in power, here come the pipelines. TransCanada (TRP-T) is probably going to get Keystone. He is expecting a little jump in all the pipelines now.

This is doing a lot of juggling, because Brazil, Mexico, Britain and Spain are all scrambling. More of a retail bank, so you do get the benefit of the doubt in that they do have good branches. They are trying to move to the digital space, just like we are seeing in Canada. The problem they are having in Spain is new elections as well as real estate issues with bad debts. Brazil is a problem. Mexico could be a problem, from the standpoint that if Trump does not want to do business with Mexico, it will have a drag on their operations. Britain has had the drop in its pound, so their currency risk is going to pick up as well. They are highly leveraged at about 126%. The stock is probably going to stay down here for a while.

Just made an acquisition in the US. With lower US taxes, they will have more cash available to start to pay off shareholders with higher dividends. They are also benefiting from a lot of coal fired plants turning to natural gas, which is still pretty cheap. As long as they keep drilling and supplying, they should be able to do well with their US operations. In the long run, he is not a big fan of electric utilities, only from the standpoint, in that there is that destructive technology risk. If Elon Musk gets a power pack on the side of every house, then everybody comes off the grid, and suddenly there is no need for transmission lines. His latest idea is having solar powered shingles on houses.

40% of revenues are already in the US, so Trump is not going to have a huge detrimental effect. The only problem with this company is that they made a bad acquisition about 5-6 years ago, and are still paying for it. Their credit quality is a little under investment grade, and they still have a lot of debts to pay off before they can really turn this company around and start to have more success.

This company was really happy with the results of the election, because they had just bought a company in Missouri. The benefits to them will be switching from coal to natural gas, and also getting wind power assets with a lower tax rate, and being able to convert the US$ back to Canadian to pay off shareholders. Shareholders are probably going to get a nice bump every year on their dividend, probably in the 10% range. As a dividend grows, the share price often follows.