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Gold. He would not handicap gold to just performing in 2017. It has been in decline for several years, but now you have the opportunity for gold to be in the sweet spot. People might get scared of what markets are going to do, or people may believe there really is inflationary pressure in the system.
Consumer discretionary is not an area he wants to be overweight in. HBC-T had a good run and good pull back. He wonders what the prospects are to generate cash flow, despite Saks and new brands they have aquired. A US consumer is in far better shape than a Canadian consumer. A lot of volume has moved on to on-line purchases. The ability to reinvest and to get people out there is so much more challenging. This is a value trap. Department stores are in a long term cyclical decline.
They were downgraded because of worries in the housing markets. The risks are that they are predominantly the Canadian housing lender and winning market share from peers. They have reinvented themselves. There are also concerns about the Canadian housing market. Multiples for all the Canadian banks are low in absolute terms, but high is historical terms. They might grow in terms of dividend growth, but may have headwinds that their peers who are in the US don’t have as much.
He has a small position because it is one of the top market share grocers in the US. They have their organic line, private label, as a catalyst for growth. This could help propel margin expansion. Find it in the low $30s or below. There may be some fund flows out of this stock in some funds and this would create an opportunity.
T-T Vs. BCE-T. It is West vs. East. He had to decide when to move toward growth. That means getting rid of some of the "steady Eddies". He owns none of the telecoms right now. Multiples are extremely high. T-T ranks number 1 with customer service and the ability to generate cash flow. Both are great dividend growth companies.
T-T Vs. BCE-T. It is West vs. East. He had to decide when to move toward growth. That means getting rid of some of the steady eddies. He owns none of the telecoms right now. Multiples are extremely high. T-T ranks number 1 with customer service and the ability to generate cash flow. Both are great dividend growth companies.
(Top Pick Feb 25/16, Up 42.24%) He does not expect this kind of run in this time frame, but he looks for undervalued opportunities. MFC-T was unique in that they had a rough quarter and yet still increased their dividend. Rising interest rates and a steeper yield curve really benefitted them.
They are very unique in that they are in the retail space, but they are able to get their inventory cycled through the system and out to the public so quickly. They always have a constant flow of heavily discounted items that continue to flow through. Along with pairing with Markets that certainly helps them to cultivate a home grown brand of themselves. You are always going to need to buy windshield washer fluid and other auto parts.
Why is oil going up and some oil stocks going down? Sometimes it is the balance sheet of the company that is driving the stock price. The crude market itself may not be enough to drive the company. People may be looking at infrastructure growth and so on. Oil price is only one component for the overall stock price.
Gold – Should it be in the portfolio? Yes. It is an inflation hedge. This was a non-issue for years. Now you are seeing wage inflation and general inflation is getting into the system. Gold can hedge against these pressures. AEM-T has probably one of the best management teams out there. They may have the benefit of the doubt already, but G-T probably has an opportunity to get a return above that from just gold. Gold will peak in about 1.5 year’s time.
Markets. Earnings are expected to grow at a crisp clip this year. The S&P has not been that cheap for quite some time, but we have gone through an earnings recession ending half way through last year. Now earnings are going to grow into multiples. 17.5 times earnings will not be so high later. Multiples may be able to contract sooner in this year. The Santa Clause Rally that was called the Trump Rally happened when Trump had not addressed details of process regarding his initiatives. Now markets are taking a breather, waiting for this. Growth will translate into dividend growth this year.