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Earnings came out today and were pretty incredible. They beat on every basic number. Not an expensive stock, trading at 15X earnings. If the tax deal goes through, they get the upside on bringing back a bunch of money. Has a very strong ecosystem, so people tend to stay with them.
There are a couple things going on. A lot of generics are hurting the stock, and same-store sales have been very difficult over the last while. Amazon (AMZ-Q) supposedly moving in on pharmaceuticals has been hurting. The talk of doing a merger with Aetna would create a fair bit of dilution, and people are worried about that. He would be a buyer. Retail over the long-term is a very strong business.
ING (ING-N) or LLOYDS (LYG-N)?This is predominantly a retail bank in the UK, and ING is predominantly a retail bank in the Netherlands. ING actually had to sell off a lot of businesses. Lloyds is a great business with a great return on equity, and trading well above BV, and is much more fully valued. ING is probably the stock to own over the next little while. They've taken a lot of costs out, and you should see a growth in earnings.
ING (ING-N) or LLOYDS (LYG-N)?Lloyds is predominantly a retail bank in the UK, and this is predominantly a retail bank in the Netherlands. They had to sell off a lot of businesses. This is probably the stock to own over the next little while. They've taken a lot of costs out, and should see a growth in earnings.
He still owns this and likes it. It isn’t trading at a very high multiple, about 10X earnings. The tax structure of these companies is kind of weird. Not many people in the US can own them effectively. If tax rates actually fall, they may actually become corporations as opposed to the present structure. This company has been very astute at gathering assets. They have well over $100 billion that they can put to work. Unlike Canada, many US pension funds don't have the ability to actually do private equities. Great dividend yield which he thinks goes up over the next little while. 8.3% dividend yield.
A great company. Numbers came out yesterday, and were a little light compared to what the Street was expecting, so the stock dropped. Made a large acquisition, which is a bad one, and it has to be integrated. That is straining the company a little. Management is very strong and have executed very well. They are good at buying assets cheaply and integrating them.
Probably paid too much for the US acquisition, but had no choice in order to compete with other Canadian banks. This is not expensive and pays a nice dividend. They have a relatively good Canadian franchise. If you see any slippage in this bank, it will probably come from the US acquisition side. Dividend yield of 4.6%.
(A Top Pick Nov 29/16. Up 1%.) Part of the issue with them was that they had a couple of drugs, one for hepatitis C that was so good that it was curing people. The market was worried that revenues were going to fall off because of that. They had lots of cash, so recently made an acquisition in the cancer area. They still have lots of cash. Thinks the AIDS drug will do well for them. They still have things in their pipeline that people are giving zero credit for.
He wouldn't buy this. There are so many other banks you could buy that are in much better shape. The difficult thing is that they don't know what they want to be. They had a massive investment banking franchise. He would suggest looking at Bank Santander (SAN-N), a good retail bank and a good wealth management company in Europe with a huge franchise in Latin America.
Sell or hold? A global generic company based in Israel. They've had a couple of CEO's they've gone through. The stock has fallen a lot. A new CEO is coming in, who had really turned around another company. Expects the 8.4% dividend will be cut even more. The generic business has been a lot tougher over the last while. The place to buy this is after they've cut the dividend. It's going to be much more volatile over the next little while.
Just reported earnings after the close, and thinks they missed on some of their numbers. This company has a very unique brand, and has room to grow internationally. There is certainly lots of international expansion. They are unique in that if there is change, they understand that they have to change, and have been able to do that effectively. On a decent pullback, he would Buy this.
Pharmaceutical stocks have had a much more difficult time because of the presidential election, a time when they usually fall. However, they've bounced back as much as they normally do. This is not expensive. Trading at about 14X earnings and pays a nice dividend yield. Has some really great drugs in their pipeline. It continues to outperform on an earnings basis. He really likes this.
Global Economy- We are seeing very strong positive numbers from the global economy. For the first time in a long time, we are seeing a kind of global growth, partly as a result of Quantitative Easing. We are effectively going into a quantitative tightening, where they are pulling back on quantitative easing by buying less debt. The caveat is that global growth is not 4%-5%, so rates can’t be increased aggressively. We'll perhaps see slow increases in rates, but now it is more about what the picture looks like. We've had 2% growth, but as well as an increase in deficit. That is unusual. A tax cut is probably going to increase the deficit. From an investment point of view, you'll have low rates and low inflation, which probably means it is pretty good for the stock and bond markets. Globally, we are seeing some good earnings numbers. They’ve been fantastic for the last couple of quarters.