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With rising interest rates, they can start matching their assets and liabilities without having to go out 50 years on the yield curve to get a 4% return. He prefers this over Manulife (MFC-T), because they have more efficient businesses and are doing a little better overseas. Dividend yield of 3.2%.
These are a bunch of pawnshops in US, Mexico and Latin America. Their basic currency is gold jewelry. If gold happens to go higher, then their share price and earnings will follow along. Given that the banking system in Mexico and Latin America is not great, this is a good way for them to grow their branches. A very good entry point.
Suggestions for getting into gold? Has looked at gold ETF’s, and doesn’t like them. When you add it all up, the actual MER is not .6%, but is closer to 1%, which is too much of a take away. He would prefer just buying gold wafers and sticking them in a safety deposit box. It is the safest and cheapest way of doing it. As long as the US$ continues to stay high, the price of gold is not going to move in a huge way.
He is not a fan of airlines, especially with an oligopoly that Canada has with this one and West Jet. His issue is that they make their money on international routes, but don’t do it domestically because there are not enough passengers. They want to move to Rouge which is really going to cut costs, but is going to upset the customers.
The problem with all the European telcos is the revenue growth. There is so much competition going on, that they are having to compete on price and can’t get their organic growth in play. Revenue growth last year was -3%, assets are not growing, and the operating margins are 3%, way lower than all the other European telcos. Doesn’t feel that they are a good allocator of capital right now
The 2nd largest bank in India. They are going through some difficulty, because of what is going on with India’s economy. They are seeing increases in loan loss provisions, while at the same time they have to deal with the backdrop of the macro environment, which is higher than expected inflation. Long-term he thinks they still have focus in future. Given that half the population is under the age of 35, this is a decent investment for a long-term holder.
This company’s big problem is their acquisition of Safeway. They thought they would get the diversification outside of Ontario and the Maritimes, but just don’t understand that the Western supermarket business is a lot different. They dropped the ball and are paying the price for it. Stock was down 17% today. Feels this is more of a tax loss situation right now.
Not a fan. Once they started to lose Lipitor off patent, they started to scramble with acquisitions to try to diversify their base. They haven’t come up with any huge blockbusters, and for the most part it has just been a struggling stock. They don’t generate continuing free cash flow, and the growth rate is only 2%-3%, and inflation is going to wipe that out.
Expectations for 2016 would be for merger and acquisition stocks to pick up. There is going to be more consolidation. If the corporate tax rate is cut, there is going to be more money flying around, which will bode well for companies like this. You have to understand that this is a project by project investment.
One of the larger property and casualty insurers. It has the lowest combined ratios, and make $0.12 on every $1 premium written, which goes right into their investment portfolio. With BV growth of roughly 10% a year, you are getting a 10% dividend in growth rate over time. Safe and stable. Dividend yield of 2.09%. (Analysts’ price target is $139.)
(A Top Pick Jan 15/16. Up 10.02%.) These are the CAD/CAM software people. They are not just into automotive or aero space, but are also into consumer products, etc. This company can protect itself against any disruptive or destructive technology. The stock has done okay, but can do better. It has been growing at a much faster rate in the 15%-20% range, but hasn’t been reflected in the stock because nobody wants to touch Europe right now. A very opportune moment to get in, and he is buying more at these levels.