BUY

If you like value, this is your company. Auto and auto parts has recently, in the last 3-4 weeks, made a nice turn. We are starting to get away from all the discussion about peak auto. This company is significantly cheaper than any other large parts producer or subassembly company. They have a great growth engine within the business, being the largest and complete auto assembling outsourced. There was about $2 billion in sales in 2016, which could be $7 billion by 2019. They are just taking over producing half of all the 5 series BMWs globally. Trading at 8X earnings, which is relatively cheap compared to its competitors.

N/A

US or Canadian healthcare services? It is very hard to invest in healthcare in Canada. In the US, this is the largest industry. There is a secular growth theme behind it in that you have an aging population who want more and more services. There are going to be bumps in the road along the way. Medical devices is the most attractive area, because some of it is discretionary spending. He also really likes the biotech space, because it is innovation and new treatments. You could consider the ETF ALPS Medical Breakthroughs (SBIO-N).

TOP PICK

A construction company contractor in 3 basic areas. Oil/gas infrastructure pipelines, electric transmission/power generation and communications. They build out infrastructure, and are benefiting as the communication companies build out additional gear on all their towers. There has been a bunch of new pipeline capacity approved that will be built out. Because of electric cars, it is possible we are going to need additional generation and transmission capabilities. (Analysts’ price target is $52.50.)

TOP PICK

The largest homebuilder in the world. They operate in 27 states and have $12 billion in revenue. New home sales are growing at greater than 10% in the majority of US states. The inventory of new homes going back to 1988, is just off the lows. The problem has been not enough homes. This company sells into the entry level buyer, and the millennials are just starting to buy homes. If there is a prolonged, economic, slow expansion, there is a pent-up demand for new homes. Dividend yield of 1.1%. (Analysts’ price target is $38.)

TOP PICK

This plays into the new iPhone theme. They expect to have 40% more content in the new iPhone than they did in the last iPhone. They make RF chips which are going into everything. The only semiconductor company that has a long-term contract with Apple. Dividend yield of 1.6%. (Analysts’ price target is $277.50.)

N/A

Markets. We are in a pretty good market, and when you are in a decent market, you want to be able to take advantage of it. Correlation, stock to stock and sector to sector, the way they behave are very low. There are some really strong, long-term themes that you can focus in. When you consider how much of the return is coming in from the top 10 stocks, it is actually not high. There are some sectors that you absolutely have to be avoiding. You don’t want to own the indices. We are in a world where active management works much better than passive. On the negative side, you continue to have to be careful of some of the big sectors in the Canadian market, including energy, retail and some of the defensive sectors that could be at risk if long-term rates slowly move higher. You want to be focused in industrials that do well in improving capital spending, technology, the 800 pound gorilla, and healthcare where demographics are driving things.

COMMENT

Has been bullish US equities since February 2016. In the spring of 2017, financials began to outperform. They had a little rest over the winter, consolidated and then had a very strong run up into earnings. This is the #1 institutional equities trader, and stronger equity markets will be positive for them. They are very strong on the wealth management side. Also, it is pretty levered to the US economy. 1.7% dividend yield.

BUY

The lifecos are big beneficiaries of rising rates. There is going to be improving loan growth in US wealth management.

BUY

There is going to be improving loan growth in the US. The charge-off for credits is coming in very benign. This bank gives you a number of different revenue streams including wealth management, capital markets and US loan growth. 75% of their revenue comes out of the US.

BUY

This is dead centre of a couple of really key long-term themes. They produce GPU’s that are used for highly intensive computing power for things like artificial intelligence, machine learning, autonomous driving and augmented reality. These are all things that are early days.

COMMENT

This owns the TSX and a bunch of data, so they make money on trading. Expects it will have a pretty good Q2 because there have been more IPOs. This is on track to earn around $4.75 this year, maybe $5 in 2018. Valuation is at 13-14 times earnings, which is very inexpensive for a company with very consistent earnings. Management has done an excellent job righting the ship. They’ve turfed a number of underperforming divisions and even raised the dividend twice in the past year. Generates an enormous amount of free cash flow. He sees upside to at least $80.

COMMENT

One of the best businesses in the world. A network toll road for businesses. They acquired Visa Europe and are trying very hard to get margins up to what they are in the regular business. There is still so much money being spent with cash, so the runway is very large. Has never been a cheap stock, and doesn’t think it ever will be. If you are confident in the next 3-5 years, you just buy it.

N/A

Is 40 too young to invest in dividends? When a company declares a dividend and raises a dividend, it is a clear signal that they are confident in the upcoming year. You can never be too young to invest in dividends.

COMMENT

Downgraded by National Bank (NA-T) from $60-$56. Thinks it was partially because US movie distributors had been underperforming in 2017. The concern is the same every year that nobody is going to go to the movies, they charge too much, the movies are crap, etc. Yet, they had record box office in 2016, and will probably have another in 2017. They’ve diversified revenues and are opening up the rec rooms. A premium company that has never missed on their operations.

COMMENT

This has been the stalwart for dividend owners, and he wouldn’t have any trouble owning it. Thinks the world is going to become fully electric, so you want to own companies that have exposure to electric utilities. You should have one or 2 of these types of names in your portfolio, especially if you are looking for income.