WATCH

It has come off over the last couple of weeks. A lot of people were playing it as a materials stock. The last couple of quarters were not that strong. There have been some increases in costs. The next couple of quarters should not be that strong. He is going to take a closer look at it if it comes down a little further.

DON'T BUY

The CEO runs it like a private company. It is hard for him if he is not aligned with the CEO. The stock has done alright on a longer term chart. But he will not invest in it.

BUY

It is a small position for him. It is heavier oil and has not kept up with other names. It is under the radar. He is quite impressed with their production ramp up and netbacks. People are hesitant to move down to these microcap names. It looks cheap. The oil price has moved up but this stock has not. He would buy.

BUY

He likes this one. It is not in his top 5 but the management team has done a good job. They have good production growth. He would buy at these prices.

BUY ON WEAKNESS

This is a micro cap stock and the company has slim margins. It has done well. You get a lot of leverage if margins do move up. It is a bit small for him. He wants to wait for a few quarters and see if they get their margins up.

DON'T BUY

The last few days it has moved. This is not one he is invested in because of the debt load. They are trying to rectify this. He prefers other companies with higher netbacks. There are better opportunities for a highly levered oil company.

WATCH

He just started to realize that quarter after quarter they were starting to miss and debt levels were quite high. Fairfax lent them quite a bit of money. It is like Warren Buffet taking part of the company on the cheap. He exited about 9 months ago. He is watching for revenues to come up.

TOP PICK

There were in the penalty box for quite some time. They did not structure their acquisition very well. It is now going better than they expected. He really likes that they are in a similar play to another that is perfecting the play in Alberta. The market is not rewarding them for this at present. He thinks they will beat expectations. (Analysts’ target: $3.75).

TOP PICK

One of Canada’s great success stories. Management owns a huge chunk of it. They recently came out with a high quarter. They were up 42% in Q1. The next 6 months or so will have them beating expectations. (Analysts’ target: $52.00).

TOP PICK

It pays a nice dividend (5.6%). It is close to hitting new highs. Amazon is one of their clients – the 7th largest. Most analysts like it. It does not trade a lot because it is heavily owned by insiders. It could play out quite well over the next few years. (Analysts ’target: $14.00).

N/A

Market.Everybody is concerned. High valuations, the US is at record highs, lots of barometers are saying that investors are very complacent, Yellin is a little more inflation concerned, there is a Trump agenda that is uncertain, North Korean fears. Because of all these reasons, people are calling for caution, but there is something much stronger going on. There is a global reflation trade happening. You’re getting improved economic data in all key regions. There are improved top line earnings, bottom-line earnings in the US, the emerging world and in Europe. We are still in an era of low interest rates. In this environment, stocks might be expensive and might be counterintuitive, but they are still a lot cheaper than bonds. This is a market we are going to have for some time. You still want to be picking away at good stocks. There are a lot of really good overlooked names on the TSX, that are starting to look really nice right now. Canadian financials and Canadian lifecos are cheap. The dividends are great. US financials are very cheap. Technology continues to be good. A lot of these areas are going to pay you 3%-4% just to wait.

COMMENT

If you play this right, this is a gift that keeps on giving. Their Q2 was good, and they raised their 2017 sales and free cash flow. He expects them to do an active buyback. Trades at a very compelling valuation, relevant to its peers. He is modelling 12% EPS. You want to buy this stock on NAFTA concerns and peak auto concerns. A good one to be owning.

BUY

He has an 81% payout ratio on 2017/2018, which is pretty safe for a REIT. This is one you can buy now. Trades at a 13% discount to his NAV and has a decent growth rate of about 3%, versus 2.8% of its diversified peers. Its balance sheet isn’t bad with a 42% Debt to Fair Value.

COMMENT

This one is hard. Missed on Q2 again, where they missed $.90. Margin compression was an issue again. There are headwinds for retail, especially for department stores. However Saks did beat their best comp in 2 years. HBC also had some pretty good comps. There are better trends in retail so far for Q3, and there is optimism for the 2nd half. This is a risky name. It is very hard to model, as they don’t have any clear earnings path. When stocks are really hard to model, often they are the best buy.

BUY ON WEAKNESS

This is an urban everyday needs portfolio. Very resilient. He models 3.8% growth from 2016 to 2018. This is not cheap, trading at around 19X, it is still trading slightly below its five-year average. 81% payout ratio, so you are going to get paid the 4.3% distribution. Its balance sheet is very good. Thinks you could buy this closer to $18.50 or $19 if you get an opportunity.