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A Canadian play that is in one of the most important themes of a secular long-term shift to web commerce. It provides a platform for small to midsize e-commerce companies. They continue to get stronger. They are so strong that Amazon (AMZN-Q) shut down their competitive product to Shopify. In the last quarter, they went from 400,000 users to 500,000 users, companies selling things on the web. Earnings were up about 85% and revenue is up 75%. The downside is that it is a momentum driven company and trades at a very high multiple of about 10X EBITDA to sales. Realistically, if they were to miss or have a miscue operationally, the stock is going to get hurt.
Why is MacQuarrie (MIC-N) weaker than Mastec (MTZ-N)? MacQuarrie Infrastructure, has a whole bunch of different types of hard assets and assets that are long life. It is going to act more like a bond because they are long life fairly predictable assets. Mastec is a company that is in a couple of secular themes, but is a growth stock. It is tightly tied to growth in a couple of areas. Thinks the secular changes taking place in both telecom equipment and pipelines, is significant. Mastek builds infrastructure, like pipelines, as well as being very big in maintenance and infrastructure work on cell towers, which are both going through very strong lifts. We are about to go through a process where all telcos are going to be putting up 5G equipment on cell towers, and Mastec gets paid to do that stuff.
Why is MacQuarrie (MIC-N) weaker than Mastec (MTZ-N)? MacQuarrie Infrastructure, has a whole bunch of different types of hard assets and assets that are long life. It is going to act more like a bond because they are long life fairly predictable assets. Mastec is a company that is in a couple of secular themes, but is a growth stock. It is tightly tied to growth in a couple of areas. Thinks the secular changes taking place in both telecom equipment and pipelines, is significant. Mastek builds infrastructure, like pipelines, as well as being very big in maintenance and infrastructure work on cell towers, which are both going through very strong lifts. We are about to go through a process where all telcos are going to be putting up 5G equipment on cell towers, and Mastec gets paid to do that stuff. You could buy this and use a Stop such as $35-$35.50.
Facebook (FB-Q) or Netflix (NFLX-Q)? These are both dynamite companies with great opportunities in front of them. If he had to choose one over the other, he would choose this one. He considered using it as a Top Pick today. Looking out over the next year, Facebook has so many different engines that are running, and almost none of them are dependent on another company. Netflix has huge growth in subscribers globally, but is still somewhat dependent on 2nd or 3rd party contracts.
Facebook (FB-Q) or Netflix (NFLX-Q)? These are both dynamite companies with great opportunities in front of them. If he had to choose one over the other, he would choose Facebook. Looking at over the next year, Facebook just has so many different engines that are running, and almost none of them are dependent on another company. Netflix has huge growth in subscribers globally, but still somewhat dependent on 2nd or 3rd party contracts.
Move some National Bank (NA-T) funds over to Toronto Dominion (TD-T)? If you want to make a switch, TD makes more sense than National. This bank has a little more energy exposure and more domestic exposure, while TD has more US exposure. However, he would rather you buy a US bank, such as Citigroup (C-N), J.P. Morgan (JPM-N) or Bank of America (BAC-N).
(A Top Pick Sept 13/16. Up 25.29%.) For the last 2.5 years, probably the most powerful secular theme in the market has been in technology, specifically 3 big themes of 1) cloud-based computing, 2) software as a service and 3) Internet of things. In the Internet of things, we talk about all the devices that are being attached to the Internet, and this company sells analog chips that go into all these connected devices. This is one you can continue to Buy.
This has had tremendous momentum in revenue growth and sales growth. Provides logistics software to large multinational companies to help them manage delivery of product to customers. In a company that has had high momentum, if you disappoint you get punished. It appears Samsung is not going to continue to pay for their product. If you own, use its recent strength as an exit.
One of the themes that is starting to play out is materials, and chemicals would be included in this. This company has lots of opportunity. The economy is growing nicely and their business is improving. You get a very nice 3% dividend. If the US economy continues to perform, the stock is going to do well. It recently pulled back to $63, which is a great opportunity to buy it.
For a couple of years, the talk has been about the Internet of Things and companies that benefit. Given that the US manufacturing economy is improving, but with very, very old equipment, there is money being spent to upgrade. This company builds instruments that measure things and are connected to the Internet. (See Top Picks.)
Social Media is a force that is going to continue for some time. This has been a really volatile stock because they’ve had a hard time finding the right mix of business to deliver earnings to investors. Years ago it was a momentum stock, but today it is more of a value stock. It has a tremendous number of people that use the service, and you are not paying much for that. They haven’t got the service right yet, but it is a really dominant platform. Technically it made a low in April/16, then rallied and pulled back. It made a higher low in April of this year of around $14. It has pulled back again. There are 2 things that can go right. 1.) They ultimately get the business model right and take advantage of all those users. 2.) Somebody decides to buy the assets and make it more usable. Doesn’t think there is a lot of room to get hurt. Would prefer to focus on Facebook (FB-Q).
Market. Has a strong belief that we have been in a secular bull market for equities that got underway in 2013 when it took out the 2,000 highs in the US. We probably have a persistent rising market for quite a long period of time, but with some interruptions. A correction was ended in February 2016, which probably opened a window for 2-3 years of a pretty low volatility market. Seasonally July, August, September are the 3 toughest months of the year. It is interesting though that the month of July is much better than seasonal. Historically, if July is good, then August and September are less volatile than typical, which has been the case so far. Over the last 3-4 weeks, in equity markets globally, the work he does around risks has shown an uptick in risks as breadth, the percentage of stocks doing well, has been deteriorating. That always causes him to get a little more cautious. He doesn’t expect significant downside. Over the next month or 2 you could see 3%-5%. However, given that July was a strong as it was and that the economic data is improving and the earnings have been very, very good, he wouldn’t expect that kind of pullback, but it is possible. Thinks people don’t fully understand that not only are earnings beating, but this quarter was the best beat for both revenue and earnings since 2010. Earnings estimates are being revised higher. The market is handling new very, very well, and that is a great indicator of the health of the market.