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Banks in the US had good numbers but the stocks are all down. So how much of the higher interest rates are already baked into the numbers. Loan loss provisions are at low levels. People are concerned about defaults. He has not been adding banks. This one's yield is higher than most, but he is not jumping up and down to buy more and is looking to expand elsewhere.
He decided to keep the name because the yield is safe and good. It is a touch business. They are doing value added food processing on many types of fish. Margins have been squeezed. He thinks this might be coming to an end. The shrimp farm in Asia looks like it is fixed. The company has value at some point. It is the kind of name that private equity tends to gravitate to. He thinks it should be trading higher, but it is not a momentum name.
Metal prices are up but mining stocks are not tracking that. There is a disconnect that he does not get. This is a pure play and there is nothing wrong with the company. But zinc prices are coming down. This caught the market by surprise. There is not a lot of supply in zinc coming on. There are not a lot of mines under construction right now. He does not think zinc is going to collapse. He thinks it is a great name.
(A Top Pick Mar 20/17, Up 4%) His only energy stock. It is not a producer but is a royalty company. They missed on production guidance by 900 barrels and they lost 8-9% and it makes no sense to him. He likes it. It is a way to have oil exposure without capital risk. It is nice light oil. The balance sheet is impeccable.
It is an interesting turnaround. It will be really pressed to see the gains we have seen. But the management team has done what they said. They fixed the company and he is impressed. The numbers today were good. It seems to be a well run company. He is just not wild about the oil patch, however.
They have been struggling. It is a great franchise. Consolidation has been the story and this has been a great story since the early '90s. They are well run but we ran into problems with weather. We are not building a third rail line in Canada. The issue is valuation. They are trading at much higher multiples than they have. He is watching it. You could put it away for 20 years and not worry.
He likes it. It is a semblance of value in the tech space. The market was underwhelmed but it but now we are seeing some of the benefits of it. They keep tucking in acquisitions. It is a winner. It gives you some non-Canadian exposure. It could hit $60 in a couple of years.
The Banks and a NAFTA Deal -- Is it being baked into prices this week? NAFTA has been a hangover in this market place that has put a damper on things. Its resolution could cause positive market sentiment, but what has been going on this week is more interest rate related. Banks will go up from a liquidity perspective rather than earnings but it won't hurt to have a NAFTA resolution.
The world has gone negative on it. There was a perfect storm last year. AMZN-Q was going to clobber them. A lot of bad news has been baked into this stock. They are at 65% payout ratio so it is safe. He is looking at it because they are down and dirty. Bad news will be over on a go forward basis, he thinks.
Market. FB-Q is one of those names that are interesting but it is still down from its highs. GOOGL-Q and so on are all off their highs. People are concentrated in the fewer and fewer names that are working. People are looking for the names that are pounded down and considering those. In a rising rate environment, markets are a little more difficult. You should have some cash ready to put to work. Rising rates lead to higher spreads for banks but higher mortgage rates are squeezing people. We are getting returns from dividend companies and a lot of dividends come from the financials and if the economy slows, they will not be immune.