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He has owned it for some time. It operates a large oil sands pipeline. They also have a mid-stream natural gas processing business. But they have take or pay contracts. The margin they make from this is high. A headwind is there storage business. Some of their markets disincentives storage. A nice catalyst down the road is the building of a dehydrogenation plant. It will be a meaningful catalyst for the stock down the road.
He likes this one. It is good as a long term hold. It is a secular growth story. He has owned it for some time. It grows quickly, about 15% at a compound rate. 17% ROE. It is trading at the higher end of the valuation bands. It is about 18 times earnings, typically 15. It is not as sexy as some of the tech stocks south of the boarder. There is good reason to believe there is good growth in the pipeline. Heavy deficit spending in the US is their single biggest customer and this is positive. They are known for near shoring so they don’t outsource to India and so on. They have an underleveraged balance sheet. It is a good long term buy right here.
They made a $300 Million acquisition in Italy. It is a modest sized acquisition for them. They have the integration capabilities to do this type of acquisition. Don't put much stock in the pull back today. They are well diversified geographically. He does not think tariffs on autos are actually going to happen.
He does not own it and would not buy it. Cannabis will be legal in a few short months but does all this capacity expansion translate into profits. Until proven otherwise these are just producers of agriculture. Tomato producers do not trade at 20 times earnings. This sector will be a job creator and will take up some commercial space but he does not buy into it.
(A Top Pick Aug 30/17, Up 39%) The gift keeps on giving. It is volatile but a great growth story. A comprehensive ecommerce enabling business. Merchants can sell on all social platforms. They keep improving their ecosystem. They have a significant competitive advantage over competitors. The knock is that it is expensive. It has been successful and people like to throw stones. Short sellers try to put a dent in it. It is likely to be a much bigger company in the future.
He does not like it because it is a bond proxy. It is interest rate sensitive. He thinks interest rates bottomed at BREXIT and will go higher from here. They are highly leveraged and got more so with an acquisition they made south of the boarder. He is taking a wait and see approach. We'll see if Ford changes the executive compensation. H-T is a slow grower and not particularly well operated. He does not know if the CEO wage is egregious. It pays to be wary of initial IPOs.
It is a great, great company. A truly Canadian success story. He is wary of the valuation at close to 30 times earnings recently. Grocers are half that. It has pretty good visibility. They think they can get to 1700 stores before the market is saturated. The next leg of growth is Latin America. They grow dividends and buy back stock with very little competition. He would buy on a pull back.
Market. We have to differentiate between trade rhetoric and trade actions. Investors need to understand that a lot of this is politically motivated as opposed to economically. It is part of a negotiating strategy. Are these going to be lasting features of the trading relationship? He does not believe it is. We have not seen inflationary pressures through wage inflation yet but these things are typically lagged. We are late in the cycle and you want to be mindful of which sectors are inflation resistive.