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Often what happens when a new regime comes in, they tend to throw the kitchen sink in with the next earnings report, and get rid of anything that is bad. He suspects that will happen. Their estimates of cash flow and earnings were high, and were not going to be able to achieve them. Longer-term, this is constructive.

Pfizer (PFE-N) or Merck (MRK-N)? Neither. These companies did very, very well back in the last part of the last century. Patent protection laws really haven’t given them enough of a boost to be able to cover the enormous costs of developing and testing the drugs, and there is a high failure rate. The companies have made massive consolidations. They’ve tried to grow by spending less. He would look at the Bio-Pharma area instead, such as Biogen (BIIB-Q) or Celgene (CELG-Q). Financially, these companies are in good shape and are growing.

Pfizer (PFE-N) or Merck (MRK-N)? Neither. These companies did very, very well back in the last part of the last century. Patent protection laws really haven’t given them enough of a boost to be able to cover the enormous costs of developing and testing the drugs, and there is a high failure rate. The companies have made massive consolidations. They’ve tried to grow by spending less. He would look at the Bio-Pharma area instead, such as Biogen (BIIB-Q) or Celgene (CELG-Q). Financially, these companies are in good shape and are growing.

With Amazon’s (AMZN-Q) takeover of Whole Foods, what a lot of people didn’t know but are finding out now, is that Walmart is a huge grocer. Over 55% of revenues are in the grocery business. The Amazon news was a throwing down of the gauntlet. That is trouble for Walmart. Walmart also has the problem of taking on costs. They have a very large labour force, which is not particularly highly paid. He would stay away from this and let things settle out a little.

This has been a tough Hold for people. It has gone sideways for about 2.5 years. Their major franchise is their TV network of ABC and ESPN. The fear is that there is going to be severe cord cutting and the “skinny bundle” is going to appear. This has led to the multiple falling because people don’t have as much confidence in the long-term prospects of the earnings growth. Their other franchises are doing extremely well. Currently it is trading at about 15.5-16 times earnings, below the market multiple. He would suggest you move on. There are lots of fish in the sea.

A western based bank. They bought a large chunk of branches from Bank of America (BAC-N) 3 or 4 years ago. A well-run bank. As the yield curve starts to steepen they will start to make more money. They’ll also be the beneficiary of a looser regulatory environment.

Longer-term, this has more upside. It had a very sharp rise from early November. A lot of the banks have gone up on the Trump trade and then back down. This hasn’t come right back down, because it is more of a valuation play than the pure growth play. Wait for the yield curve to steepen.

(A Top Pick June 15/16. Up 54%.) He knew that sooner or later the Fed was going to do an about-face and start to tighten, which would help the banks.

(A Top Pick June 15/16. Up 42%.) As with the banks, this is one that you Buy and be patient with. Home formations in the US have been below trend for years and years. People have to live somewhere and the homebuilders will do well over time.

(A Top Pick June 15/16. Up 39%.) He still likes this, but sold his holdings. There is an outstanding offer by AT&T (T-N), which may or may not be approved.

If you look at this against other banks and do a peer group analysis, what worries him are the management issues and what they have done in the past year or so. It surprises him that this bank hasn’t suffered more than it has. He does not want his clients to be involved with this, and would encourage people to move away from this and go to Citigroup (C-N) or Bank of America (BAC-N).

Not a company he owns or would own. It is highly speculative. In terms of the value of the company per car produced, it is $675,000 of market capitalization. For comparison, General Motors (GM-N) is $4000.

People have been saying that the Apple phone is going to fail for as long as he can remember. This has done very, very well for his clients. He has trimmed his holdings 8 times. A 3^rd of their market capitalization is in cash. The iPhone 8 is the 10^th anniversary of the iPhone. They are putting a lot of money behind R&D, and he thinks there are some good things that are going to come out. There is a 93% loyalty rate amongst Apple buyers.

This company went through a very, very strong growth period. It has run up the valuation ladder and then has come down. The fundamentals of revenue growth, cash flow growth and earnings growth have been steady and uninspiring over time. People now have faith in the new CEO and the Cloud, so it is going up the valuation ladder again. This is an OK buy here. A little bit expensive. He thinks there are lots of other technology companies to look at.

His favourite railroad, but doesn’t think railroads are a great buy right now. They tend not to do particularly well when there is strength in the US$. They are pretty reliant on the export market, which is currently a little tough.