Latest Stock Buy or Sell? Make More Informed Decisions!
Today, David Burrows commented about whether FDX-N, NEE-N, MS-N, AGN-N, BABA-N, WFG-T, AAPL-Q, BKNG-Q, T-N, INTC-Q, CAE-T, OCLR-Q, UTX-N, AAR.UN-T, TXN-Q, JPM-N, IR-N, SHOP-T, MTZ-N, AQN-T, MU-Q, NVDA-Q, CSCO-Q, ENB-T are stocks to buy or sell.
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We are in a low interest rate environment, and pipelines are something people would own if they believed we are staying in a low interest rate environment. From 2009 to 2014, there was an enormous boom in production, which meant tolls went up a lot. As they went up, earnings, cash flow and dividends went up, and the multiples that investors were prepared to pay went up. They turned into growth stocks. Then volume growth started to slow down, so the multiple has been compressing. He wouldn’t focus in bond proxies such as this.
Since the market ticked up in February 2016 it has been a very steady rally. The leading group off the bottom was technology. Almost always, a group that leads off the bottom will continue in the course of the cyclical rally. This group continues to lead the market. Old tech is not expensive, it is like 14X earnings. They have great cash flow. This is not the best stock in the group, but if you own it continue to hold it.
Builds and maintains cell towers for the telcos, and they build pipelines. A great company. It has performed better than 67% of the S&P companies so far this year. Has been consolidating since June. He continues to really like telecoms, which is 45% of their revenue. There is still some growth in US oil production, and they should continue to do okay.
A great case study. Basically, traded from $15 to $120, and consolidated nicely along the way. When the Citron report came out, the stock was at $105. Fundamentally, it is a great business. The Citron report had enough holes to drive a truck through, but there is some smoke. He was stopped out at $105 and has moved on. He’ll wait and see how the company handles this. There will be more when earnings come.
(A Top Pick November 22/16. Up 23%.) He continues to like the industrial sector. Machinery is slowly becoming interconnected. The capital stock of the US economy is the oldest it has been in history. In the last year, companies who are spending, are being rewarded by the share prices going up.
(A Top Pick November 22/16. Up 28%.) This could be another Top Pick today, if he hadn’t chosen it 3 times in the past year. Financials will benefit from a reflation cycle, probably for 5-6 years. US financials are trading at about 1X their BV, and have traded as high as 3X in the past. The best bank in the US.
Industrial properties. It is more cyclical and more tied to the business cycle. As business gets better, it will likely be able to raise rents. It has now pulled back to the 150-day moving average, which is a good place to buy it. Dividend yield of 4.8% is pretty attractive.
Stop losses? He uses point and figure price charts, which mark out the orderly progress of either higher highs and higher lows, or lower lows and lower highs. He would encourage you to get a book on this. A very good one would be Tom Dorsey on point and figure charting. In the absence of that, for a longer-term investor, you could use a 150-day moving average. It is amazing how often a stock pulls back and then reverses higher at their 150-day moving average. If a stock dipped below this on heavy volume, that would be a good reason to become a seller.
This makes components for fibre optic networks. This sector is quite cyclical. It has big advances and then when capacity comes in, it is harder to get a margin. The company in this space all had a wonderful run in 15, 16 and into 17, and have been consolidating since then. While fundamentals look good, the price chart is a little bit concerning. It is not broken, but has become much more volatile and has been unable to make progress against a rising market. Relative strength has been weak. He would be cautious.
Market. The 10-year chart for the S&P 500 is a thing of beauty. Trading at record levels. If looking at PEs vs estimates, there are people who will point out that the PE multiples have been moving higher, so prices are higher. Last quarter, 55% of companies beat the estimates, so estimates are too low. That has been rising. PE multiples that people are looking at are probably making stocks look more expensive than they are. Secondly, we are in an extremely low interest rate environment, and PEs can be higher. We are in a secular bull market for equities. It didn’t start until 2013. When you took out the highs from the last bull market in 2000, that was the 1st year of multiple expansion, and multiples have been expanding since. There will be corrections, but expects equities between 2013 and 2023 are probably in the teens from a return standpoint. The volatility we have been seeing, that everyone is saying is so low, is virtually identical to the early 90s and identical to the early 50s. Both were in secular bull markets. We will see a good-sized correction out there somewhere, but none of his work points to any of the things that would be happening if it were coming up soon. As long as the percentage of stocks performing well are expanding, there is no bear market or correction that has ever taken place while that is happening. The most important thing in the way a market is behaving, is how it reacts to news. For example, there have been lots of big news items last year and the market hasn’t cared.