- Page 3/3
- Next Page
For a TFSA? This builds and produces green energy globally. It pays a 4% yield, which is very attractive. However, the keyword is "Power". It is part of the utility group even though it's a little different, and is going to get painted with that brush. You have to remember that 80% of return is buying in the right neighbourhood. If your view is that interest rates are going to stay relatively low and bonds are going to be benign, this would be great. However the signs are pointing to higher rates, a little higher inflation, and you want something with a little more dividend growth as you go along. He would suggest a bank or one of the big, mature software companies. (See Top Picks.)
T.I.P.S.? Inflation protected bonds will see the rate go higher as rates go higher. It has a floating rate that is tied to the inflation rate. It is going to do better than a fixed rate bond in the event that rates and inflation go higher, which he believes is likely to continue. If he had to own something in the bond market, he would either own a high-quality corporate bond with a short duration of 2-3 years, or something like T.I.P.S. that would benefit in rising rates.
The sector is under some pressure. This has had a short-term hit moving down from $14.40 to $13.30. This company does have a pretty good dividend growth, which makes it more attractive than many in the sector. However, it is not going to lead the market. If you are looking for total return, growth and capital plus some dividend growth, you might want to look elsewhere. (See Top Picks.)
Canadian lumber? NAFTA and trade issues are risks. You’ve got 9 million millennials in the US starting to move out of their parents' basements. The home building industry is performing really well, and when there is strong demand, they will pay the higher price for Canadian lumber, whether there is a tariff or not. He wouldn't shy away from the sector. You might consider investing through the ETF Guggenheim Timber (CUT-N), which gives you a basket of US lumber companies. A great way to make not too big a bet, as there are some packaging materials in there as well.
This is a global business. It has lots of business in Europe. It’s the largest, independent, complete vehicle assembler. They are putting whole cars together. They're going to grow the business 25% a year over the next 3 years. It is growing at a faster growth rate than the industry by about 25%, but trading at a discounted earnings multiple to the industry, so it's cheaper, but growing faster. He would be comfortable owning this.
This is China's largest global online market place and is growing very rapidly. It’s not inexpensive. Trading at something like 40X next year's earnings estimate. There are political risks, because it is in China. The structural theme of online retail and marketplace is not one that is going to go away anytime soon. This should grow 50% this year and maybe another 30%-40% next year. Estimates are being revised higher.
Thought the earnings today were good. One thing people are concerned about is that the number of users in the US was down quarter over quarter, so they're going through a change up in the news feed. Thinks they have a very large opportunity to monetize the space they have. The social media theme is one that has a long way to run.
Junk bonds? High-yield bonds. A lot of people are in them because the yields are higher. There is higher risk. Within the last 3 years, the extra return investor is getting for taking that additional credit risk has become narrower and narrower as we become more and more confident. He doesn't have any high-yield exposure at this point. He is bearish bonds, and is Short the bond market.
This peaked out at $54 in 1999. It finally broke out from the high in 2016. In 1999 they earned $.70 a share, and in this past year they earned $3.43 a share. This company is rejuvenated through its Cloud-based business. They reported great earnings tonight. Their Cloud business grew 98% after growing 90% last quarter. Their gross margin widened again, becoming more profitable. Their earnings were up 15%. They are growing their dividend at greater than 15% a year, and that should continue for quite some time. Subscription software sales were up 40% year-over-year. Dividend yield of 1.8%. (Analysts' price target is $98.67.)
He really likes financials. This is a play on a resurgent private client investor. Their new assets last year grew 58%. 40% of earnings come from net interest margin, the money they make holding cash for their clients, and they are a clear winner for rising rates. They get 40% from asset management. As client assets grow, their fees grow. As new money comes in, their fees grow. They were the 1st to start a big Robo advisor in the US. This is a growth company that benefits in a number of different ways. Dividend yield of 0.8%. (Analysts' price target is $61.33.)
This is a play on the US economy. Companies do not like to buy heavy equipment, they like to rent it as it is much more efficient. When the economy gets better, the capacity tightens up and prices go up. They are now seeing rising prices for their rentals for the first time in a few years. When that begins, it tends to go on for a long time. It’s a cyclical business, but if we think companies are much more optimistic than they were 18 months ago, then they are going to start to build and are going to use equipment from this company. The company generates a lot of cash. (Analysts' price target is $194.87.)
(A Top Pick March 21/17. Up 40.77%) Continues to be one of his top 10 holdings. The story continues to play out. Tax changes help. Rising interest rates help. The growing US economy helps. Cost cutting helps. This is one that can continue to do very well. It's only trading at about 1.4X BV. It’s traded as high as 3X BV in the past.