Today, Jeff Parent B. Eng. FCSI CIM and David Fingold commented about whether 6965-JP, KYCCF-5, KEYS-N, VALE-N, RTX-N, ING-N, BCS-N, PHG-N, 7741-JP, KEYS-N, SWTQ-SW, STRS-TASE, VEOEY-5, AOS-N, CGNX-Q, LYG-N, KEYS-N, NOK-N, CHRW-Q, DB-N, PTN-US, GTN-N, WFC-N, BIR-T, KEY-T, ECI-T, CFW-T, RYN-N, HCP-N, PSD-T, RUS-T, WCP-T, GOOS-T, CRM-N, EFN-T, HBM-T, CXI-T, LYV-N are stocks to buy or sell.
Market. He thinks there are signs that China is backing down. China has already placed tariffs on so many things that it has little room left. He thinks the Chinese IP policies have been a poor deal for America and that it was necessary for Mr. Trump to stand up to China. Responding to a question about Trudeau, he commented that his focus is international rather than Canada.
He would stay away from it. They are mostly focused on lines of business that are shrinking. For example, they do a large business in writing letters of credit, but international trade has been shrinking, as a percentage of GDP, for years. Deglobalization started in 2010/2011 has been happening for years, since Accenture concluded that offshoring probably cost money rather than saving money. There is now a trend of nearshoring: jobs are coming home because costs are lower here. You don’t need letters of credit when you are moving within a region. Also, they face capital strain under Basil III. They were a very significant underwriter of mortgage-backed securities. Sub-Prime and Alt-A products basically don’t exist any more, so Deutsche Bank no longer offers that mix of products; it is now marketing a low-margin product. A recent report from JP Morgan can be summarized as “They should shut their New York branch and go home.” They have been severely impacted by Tax Reform and their financing in the US appears to be high cost.
They are a freight forwarder. They arrange for either the shipper to get their goods to market or a purchaser to bring goods to market from elsewhere in the world. They are victims of deglobalization. They become a lot less necessary if goods are going to travel shorter distances. He says that Amazon has also disrupted this market; it has become the Uber of logistics. Merchants can sell through Amazon and let it take care of shipping their products anywhere. Amazon has commoditized freight. He believes that freight forwarders will participate in the economic cycle but they will be much less important in the future because of the decline of trade and because of the added presence of companies like Amazon that can basically find the empty space on any truck to get a product to market.
People don’t hear much about Nokia for a reason. He has stayed away from companies that build legacy wireless infrastructure because of the transition to 5G. 5G wireless is more dependent on software, on the configuration of the local network nodes, and on the needs in the local area. 5G will displace landlines. Because development and deployment requires so much precision work, you have to get into metrology to do it. He prefers Keysight, the old HP, in this space. Keysight will provide the tools for the service providers, who will otherwise rely on generic hardware.
He sold his Lloyd’s shares several years ago. He invested with the expectation of some catalysts: that they would expand their business by increasing the number of types of services they provided to each customer and that they would significantly increase their dividend. Neither increased to the extent that he had planned for and he doesn’t see significant catalysts for growth now. (Analysts’ price target is 76p compared to a current stock price of 67 pence).
This is one of a small group of companies that do advanced machine vision. This is a very fine company. Its primary public competitor is Keyence Corporation (KYCCF-5) in Japan, which he has shares in. Their business has slowed a bit this year. They do a lot of project work for large customers, like Apple. He expects it to remain range-bound at least for the first half of this year. He doesn’t own the company now out of mindfulness of the cycles in its business. He is looking for opportunities to get into this stock in the future.
They are the largest producer of water heaters in North America and they are the premium brand, and a leading supplier, of water treatment systems in China. There was a tremendous opportunity for buying this stock back when housing starts were low but he was concerned about growth in China and didn’t buy. That was a mistake. The company executed well. As a present investment, his concern is that they still make a lot of their money in China. He is reluctant to commit to the hypothesis that high growth will continue in China. It might, but it might not. Chinese industrial policy might make A.O. Smith vulnerable.
People see this as a water stock but the universe of water companies is divided up. This is a water utility, along with waste management. The problem with being a water utility is that it offers stable cash flow. If interest rates rise, then the intrinsic value of the cash flow falls. He is concerned about the entire utility space. It has a strong dividend yield so it should trade as a bond proxy. He prefers to be outside of the regulated space for investments in water. He invests, for example, in Strauss Group (SGLJF-5), an Israeli company who has partnered with Haier in China, selling residential water treatment systems at a very attractive price point. They also sell home water treatments in the US and the UK.
This is an Israeli company who has partnered with Haier in China, selling residential water treatment systems at a very attractive price point. They also sell home water treatments in the US and the UK. They offer a razor/blade type of product. The water purifier requires the consumer to buy a subscription to obtain a UV bulb and another proprietary consumable product. This provides an ongoing revenue stream.
A solid base at $32. Fundamentals aren't great but it pays a 5% dividend. Not an oil/gas co. but a midstream distributor and processor. Chart shows a potential to return to $36-37. There's enough trading support since February. A dividend, short-term play with potential to rise a little higher. (Analysts' price target $41.00)