- Page 3/4
- Next Page
It’s cyclical but he thinks its a good time to get back in. The return on invested capital in the last 2 years has improved from 1% to 3% and now in Q3 it’s at 7%. It’s going in the right direction, the valuation is quite reasonable, you got the commodity prices, mostly coal and copper, going in the right direction too. Things are going in the right direction, he really likes it.
(A Top Pick Jan 6 /17, Up 11%) It’s a juggernaut in this space, one of the biggest fully integrated company in the world. At the time it really wasn’t that much of a risk. Oil prices went down but because it was fully integrated, it beneficiated from the pump side. He still feels it’s low risk despite the price going up a little bit and you’re getting a nice little dividend
(A Top Pick Jan 6 /17, Down 29.59%) When you buy cyclical, you need to be prepared when it goes the wrong way. This is still a world class company. They have done a lot of innovation through the years, return on capital has been very consistent for many years, and of course the last few years haven’t been great. The services companies are really tough, they are the first ones to get cut, and then when things starts to get better they are the last ones to go up. Energy didn’t quite have as good a year as they thought and services got left behind.
(A Top Pick Jan 6/17, Up 25.85%) Auto parts company. He likes this space and he likes this company. Had a good run but would probably take some money off the table at this point. He sees some weakness in their business. Thinks there are other good companies you could take some money off the table and put some in Martinrea (MRE-T) that still looks good or Magna (MG-T) that looks fantastic. Nothing wrong with this company but there might be better options. They have recently diversified from the automotive with their acquisition of MacDon Group that makes them more exposed to agricultural market.
Buy at these levels? He thinks it’s a buy. A classic juggernaut. Thinks the acquisitions of the FOX assets is going to go through. He’s seen good enough operations in the last 5 or 6 years and so consistent. The results are really good; 12-13% return year in year out. It is stretched on valuation, but he will pay for a good company over a lousy or one that looks super cheap. He is not too concerned about the ESPN situation with people cutting their cable subscription and going to Netflix. He thinks they will figure out a solution either stream it or whatever, the content is still there, it’s just a different platform, they will figure a way to monetize it.
He doesn’t know a lot about this company. The return on capital is quite good, it’s a good business, it looks a little bit cyclical. This looks quite good, they’ve grown and seems to be improving their return on invested capital and looks pretty cheap too. Nice little dividend and looks very sustainable. Decent balance sheet. He would hold onto that; it looks great. He’s not sure about the situation with Air Canada (AC-T).
Will the DOW stop its straight up path? There are some good companies doing really well, buying back shares and doing a lot of good things, but at some point this valuation is going to catch up to us. The tax bill in the US is good in the short term but the ballooning deficit it’s going to create is going to be a problem down the road.
This used to be a really good company but it completely dropped off from his radar because it really had some tough times. Has bounced back quite nicely. Return on capital went from almost 0% to now 8% in trailing Q4 which is a great sign. Dividend yields 3.6% and payout ratio seems very reasonable. Hardly has any debt. All in all, for a company he hasn’t looked at for quite a while, it’s one worth taking a deeper look at.
They started looking at oil & gas a little bit more. This would be on the riskier side of centre. Thinks it’s a little bit too early. Return on capital still negative. Looks cheap but there is quite a bit of debt. A lot of things could go in their favor or a lot of things could go the other way. That’s going to be one of those that’s either going to be spectacular or it’s going to flame out. Depending on your risk tolerance it’s probably best to take a small position and see how it goes.
He’s been sceptical of this company. They’ve put a lot of investment in capital and never really materialized just yet. Nothing wrong with management. They are sitting on this big asset of at least $28B in capital but the return is still negative at the moment. It won’t take much to justify the price as it has been beaten up pretty badly. Even with just a small 5% return on capital, that would justify twice the price it’s trading at. They are definitively in a show me, prove it to me phase.
He thinks the growth from acquisition is going to continue. Doesn’t look like they overpaid too much on their acquisitions. Still generating descent return. Not ridiculously overpriced. Balance sheet is quite good for a company that has done so many acquisitions. Think it’s in pretty good shape.
One of the leader in technology chips for cell phone and other technologies. Has had some weakness in term of performance in the last few years. He think this is still up to be acquired by Broadcom (AVGO-O) which he likes. If he was going to buy this, he would say there is some risk because the returns have slipped a little bit. But because of the potential Broadcom acquisition you could play this and get a little bit of a premium, and get some cash or become a Broadcom shareholder.
Would you get in at this level? He would get it, it’s a great company one of the most consistent he has seen. Earns 13-14% return on invested capital. You need to pay up for consistency. Stock has gone up, it’s not super cheap but it’s not out of the stratosphere just yet so you can still hold it.