Latest Stock Buy or Sell? Make More Informed Decisions!

Markets. With markets going up, it is time to look at alternative assets through using Pair Trades giving some hedging protection for portfolios. The markets have had a heck of a rally since the election on November 8, a good start for 2017. You have to question as to how long this could last. The forward valuation of the TSX index is trading at 16.4X forward earnings. That is the highest it has been this time of year since 2001. If you look at the expectations for earnings growth in Canada, the market is looking for about 24% this year, twice what it is in the US. The VIX, a measure of volatility, has only been this low 3.5% of the time in the last 2 decades. We are a lot closer to the top of the market than we are to the bottom. It makes sense to put some sort of portfolio protection into place.

Last summer the company was talking about sales execution of $350 million from 2016 to 2018. He questioned that. They were about a third of the way through their fiscal year and were predicting executed sales of $180 million. First-quarter results came in with only $1.1 million. In November, the OSC put the company under a disclosure review, and so they had to put out a press release rewording the press releases. Also, had to amend their annual information form. Expects there may be a further delay in the roll-out of their mass production. He calculates they are sitting on 4 years’ worth of inventory from their German plant that they acquired. Thinks they are going to have to do an equity issue and there is going to be dissolution of some existing shareholders. There are better places to put your money.

He still likes this. Prefers the preferred B shares as opposed to the common, but likes them both. Given what has happened in the rebound in oil/gas, this is probably one of the most leveraged plays on the street having recently bought FirstEnergy. On top of that, the Wealth Management Group put themselves up for sale in the fall, but some of the costs they had when they took over the McQuarrie group are now coming off the books, so he thinks profitability of the Wealth Management Group is going to go up.

They indicated taking the company private. There was an update on a press release about a week ago, where they indicated the privatization had 17 expressions of interest. The process started October 31 and the CEO thought it would be about a 6-month process, so by the end of Q2, he expects the process will be completed. Probably worth $2 over the value.

Recently added a small position to his portfolio. He is quite impressed with management. They have 90% market share in Canada. A nice play on Internet growth as people use the Internet for shopping. Results will be coming out shortly, and there should be decent sized results from the Christmas season.

(A Top Pick Feb 8/16. Up 20.45%.) Got their Schedule 1 license as a bank in September. Unfortunately, when the results came out in early January, people were looking for immediate benefits, but it normally takes 3-6 months to see the benefits. He still really likes this.

(A Top Pick Feb 8/16. Down 16.58%.) Long. (A Pairs trade with a Short on Valeant Pharma (VRX-T). Unfortunately both stocks came down.

(A Top Pick Feb 8/16. Down 30.57%.)*Short*. He is very proud of this company. There are very few Canadian companies that can say they are a world leader in what they do. Had this as a Short because they tend to be a late stage player in oil/gas. Feels the market got a little bit ahead of itself in pricing this in, but rather than fight the tape, he exited the position.

This tends to be a serial acquirer, and he generally doesn’t like these. However, in this case he likes management and feels they are very competent.

A name he really likes. This has a 9.1% EBITDA for 2017. Yield is about 5%. They made an acquisition last year on the HVAC servicing side. It was fortunate that the summer was so hot last year. There are still potentially some costs synergies to take out of that. The part he really likes is their sub metering business, a growth business that is not getting any credit from the street.

Had a Pairs trade with Service, and was Short it in the fall, largely because the company’s Q2 numbers were off the charts compared to the industry. It worked out well for him. As a Long position he thinks it is a good company, but if he had a choice, he would probably take Cervus (CERV-T).

He looked at the name 4-5 months ago, and really liked it. Waited for an entry point but missed the boat. A great name. The dividend is sustainable. The nature of their business tends to be anti-cyclical, from a cash flow point of view.

This has a deal with Staples and NAPA auto parts, as well as talking to a Canadian courier company. The main problem is that Canada and the US have not really defined what the rules are going to be for drones. In Canada, you can only fly a drone within your line of sight, but that will change. Feels this company probably has the “first mover delivery” advantage to getting a license.

Likes the low cost to Book ratio, which is trading at .8X. Compare that to Canadian banks, which are at 1.6X. Also with some of the deregulations that are coming in the US, this bank will be a beneficiary.

Produces succinic acid, a base for an intermediate chemical or commodity that is used in a variety of things like plastic, polyurethane, and various other things. Generally made from petrochemical products, but their product is made from industrial sugars, which has a lot of advantages such as that it can be produced cheaper. It had 2 equity issues within 2 weeks which the market did not appreciate. The company has taken their knocks and are now cashed up essentially, so there shouldn’t be any more issues going forward.