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High Liner (HLF-T) or Clearwater (CLR-T)? Sold his holdings on this about 3 months ago. Both stocks have had about a 22%-25% haircut in the last 90 days. Both are free cash flow generators, 8.2% for Clearwater and 6.1% for this one. There is $55 million of free cash flow for Clearwater, about 50% more in absolute dollars than on this one. ROE is about the same. The big difference in the coming year, is on the ROE, where it is forecasted to be 21% for this company. In comparison, Clearwater appears to be better value with better growth prospects.
High Liner (HLF-T) or Clearwater (CLR-T)? Both stocks have had about a 22%-25% haircut in the last 90 days. Both are free cash flow generators, 8.2% for this one and 6.1% for High Liner. This has $55 million of free cash, about 50% more in absolute dollars versus High Liner. Analysts are more optimistic on earnings estimates. The big difference in the coming year, is on the ROE, where it is forecasted to be 32% for this company. In comparison, this one appears to be better value with better growth prospects.
You can buy a bag of blood product for about $200, and use this company’s method of extracting the high-value items from it. The 1st one is plasminogen, an orphan drug meaning you don’t have to go through the many years of testing. The stock is reasonably priced. They are also working on a drug PBI4050 which shows some very interesting early indications for reducing fibers. Expects you are going to see good opportunities in cash flow going from 2017 into 2018.
Average age of machines on a shop floor is about 20 years at roughly $1500 per machine. They can tie them all together and measure productivity. The payback is extremely attractive at about 400%, and the payback is less than 6 months. They work with Cisco (CSCO-Q) to create and reduce concerns between the shop floor and the top floor. They also have a relationship with Mazak, the largest machine tool maker globally with a 1,000,000 ft.² factory in the US, who are going to use their product as well as championing it out to a large number of customers. Thinks 2017 will be an attractive year.
This has done extremely well, and thinks there will be more upside ahead of them. Copper, metallurgical coal and zinc. Zinc is one of the favourite metals over the next 3-5 years. Trading at 12.8X enterprise value to EBITDA trailing. It is cash flow positive which is very unusual for a mining company. Has a 19% ROE. Copper has been given a new long-term monthly and quarterly Buy, which typically means it goes longer and stronger. Very attractive.
Consensus earnings estimate for 2017 is $1.68, which compares to 2016 estimates of $1.61. The 6.7% dividend yield is the big question. Can it be maintained? The payout on 4 quarters of trailing cash flow is 75%. His rule of thumb is, if it pays out more than 100%, it is not sustainable. Cash flow estimate is from $1.75 in 2016, growing to $2 in 2017, a 10% increase. There is a concern that rising interest rates will affect them, but in his view, they have a greater opportunity to end up increasing their business, compared to someone who has a stable portfolio of either apartments or commercial rental properties. There are other income opportunities he would prefer.
This has done well. A very consistent company. They have very long-term contracts with companies that want to outsource their server farms and other capabilities on the computer side. As a result, this company has roughly 7-9 years’ contracts of a lot of money in advance. Extremely good visibility. Year-over-year sales growth has been fairly modest. About a 5% lift in earnings. Extremely disciplined in their acquisitions, so he expects the stock will mark time for the moment, waiting for another significant acquisition opportunity.
(A Top Pick Oct 16/15. Down 40.26%.) Rogers was using their product, but decided they were going to do it themselves. Ended up writing off $500,000, and are now signing up with a US company. This company still has a great product. They are selling it into Europe. Thinks there is good opportunity going out for the next 3 years. A very small, competitive industry.
Ranks 157 and is in the top quarter of his database. Sales were down 3% year-over-year, but still managed to squeak out a 52% increase in earnings. Earnings estimates have been shaved by about 8% in the last 90 days, and are expected to grow by about 60% from $.23-$.27 in 2017, against a PE of 25X. Unfortunately, free cash flow is not positive.
They put a tiny quantity of a specialized chemical into petroleum products, and then a spectrometer finds out if it is the proper concentration. They sold this part of the business to a Swiss company and have a 5+ year kind of a royalty stream. The company is working to sell some very sophisticated equipment into the semiconductor space. They are also beating the bushes in Israel, where they have had a long-term source of innovations. If they are successful in 3-D imaging and a portion of extremely sophisticated stuff they are doing in the semiconductor space, it would be optimistic. He sold his holdings.
A growth by acquisition company, engaged in aviation manufacturing. They have some scheduled chartered airline services. The company has done extremely well. Ranks 63 in his database, roughly the top 10%. Earnings are expected to grow modestly by about 5%. A PE of 17X. ROE is reasonable at 14%. Unfortunately, free cash flow currently is -5%. This doesn’t seem cheap. Prefers others.
Market. We are coming out of a 3-year period where bonds have outperformed stocks. It now looks like we are coming out the other side, which raises the question, are we going to hit 20,000 on the Dow. In the very short term the answer is yes. He is expecting a bit of a correction in the 1st quarter, but once that is behind us, it is onwards and upwards. You will have an opportunity to sell bonds over the next 2 months as the prices move back up and yields come down a bit. Take the cash and put it into equities, because he thinks there is lots more legroom and upside on equities over the next 2 years.