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This is the real estate arm of Empire, and the major tenant is Sobey’s, which is struggling. About 30% of their rental is from Sobey’s. A strong, defensive style REIT, because it is generally anchored by non-cyclical retail outlets. You are going to clip your 6.5%, but doesn’t think you’re going to make anything more than that. This is not a growth story. He owns their debt.
This was a focused railroad hotel. They did a new contract with the rails, which allows them to resell 20% of unused accommodation to the general public. They focus on suburbia USA. The railway business is less important now, being only 30% versus the 60% it used to be. The stock has been under pressure, and he wouldn’t be surprised to see better numbers coming out. It is interesting and he is looking at it.
Canadian Banks? It’s all about a compelling valuation. Banks generally do an ROE at about 14%-16%, and are only valued at 12X earnings. In this environment, where we are seeing a little bit of rate increases, NIM is creeping up which is good for them. Also, a lot of are in the US. He is positive on the banks. Next year should be a breakout year for them.
Has been hit because of their overexposure to Alberta. Announced they are going to sell a lot of their Alberta properties, and get more focused in the US. This is transforming the company into being better. There is still a headwind because of their office exposure in Alberta. He isn’t overly negative, but wouldn’t step in yet.
(A Top Pick March 28/17. Up 11%.) Started liking this at around $20. Trading at about 12X earnings. Last quarter they beat their numbers. They’ve put a lot into cost containment. Also, the Alberta economy has come back. Car sales have also been better. He expects it to track into the high $20 over the next year.
Trades on an EV to EBITDA at about 11X. Historically it should trade at around 13X. Thinks it is cheap. This is the pipeline from the oil sands. As all the producers in the oil sands increase their output, they are going to have to put it in some pipe. With a 4% yield and a tremendous cash flow, they have the ability to grow the dividend. It has the potential to go higher.
Inter-Pipe (IPL-T) or Enbridge (ENB-T)? He likes both. Just bought this at $43. It has slightly more opportunity as they got hit so hard. Both are toll booth investments, but the street is typing this as an oil company. The yield is excellent. If he were being pushed, he would say he likes this one better.
Had owned this about 2 years ago. Was looking for something on the TSX that had US exposure that would participate when the US housing market recovered. This one did and he sold his holdings at $10. US fundamentals are fine. They have a lot of assets in Arizona, Florida and in the US south. He had problems with the valuation and as to where it could go further on. Not a fan, but the fundamentals are in their favour. He would rather buy something that was cheap and had some valuation protection. 2.3% yield.
Announced they were going to make close to $1 billion in sales out of the US, and reinvest in multi-resident businesses. This is a strategy that is getting a little tired. His biggest issue is that they are so diversified, such as office, residential, redevelopment, Canada, US, it is too much for an analyst. Thinks they’ve been hurt by this.
What's a good blue-chip, dividend paying energy stock for a long term hold? He really, really likes this one, the best in class. Assuming oil ranges from $40-$60, this company is going to gush about $2.5 billion in free cash flow in 2018. They are going to pay down debt aggressively. They’ll also be increasing the dividend.
He is more bullish on this because the valuation relative to the sector is cheap. Over the next 2 to-3 years, this company is really going to outperform, and it’s all about the fibre to the home. They are going to hook up about 9 million homes, and are about a 3rd to a half through. This has a tremendous amount of free cash flow yielding about 6%. Dividend yield of 4.6%. (Analysts’ price target is $62.)
