Today, Bruce Murray commented about whether LNR-T, BSX-N, EADSY-OTC, BCO-N, ET-T, CPX-T, AQN-T, BABA-N, ITP-T, BNS-T, BSX-N, MDT-N, ORCL-N, KR-N, CTC.A-T, CTC-T, OTEX-T, MAXR-T, FTS-T, CNQ-T, NFLX-Q, DOL-T, UNS-T, FDX-N, ETFC-Q, MFC-T, IP-N, TCL.A-T are stocks to buy or sell.
This has 130 million subscribers globally and there are 1.2 billion cable company subscribers. There’s a long way to go in market penetration. He sees it as still being in a growth phase and compares this to Amazon 10 years ago. After they start running out of new subscribers to add, they can increase revenue through pricing leverage. They are currently very liberal in terms of how many people can watch shows through the same subscription at the same time. Tightening that can raise revenue. They are the first mover in a growing space. He has only a small position but believes it has significant upside over many years.
There are short term opportunities in the oil patch due to Venezuela’s collapse and restraints within Saudi Arabia. CNQ is the quality play in this sector, so someone who buys this company is not hurting themself. However, he thinks there are way better places to make money than resources. He thinks the Permian will drown the market with more oil and there are difficult issues in access to market for heavy Canadian crude. This is a well-run company but this type of business is too tough at the moment.
They make communication satellites. Orders are big but are few and far between. When the company gets orders, there’s a lot of excitement in the stock and when it doesn’t get them, there’s a lot of disappointment but there’s also a possibility of cost overruns. This is a very volatile business (and stock). He owns some on the possibility that it will bounce back to $70 but he considers this high risk. Dividend is 3.23% but volatility can wipe this out. The stock is down over 40% this year because of disappointment from the conference call which included postponement of orders.
This is a great company. When WalMart entered Canada, they considered Canadian Tire the one company that was unassailable. They’ve done a good job of diversifying and of controlling the sports business in Canada. Their business model--control small-town Canada--has been very dependable. However, they are dependent on external factors. For example, it has to snow enough for them to sell snow-seasonal items. The stock has done very well over the past 5 years. He sees no reason not to own it, but he wouldn’t buy more. It costs too much.
(A Top Pick November 13, 2017. Down 1%). This reminds him of Oracle and Cisco, which sat at the same level for a long time and then revitalized themselves. Oracle relies on the big banks and other large companies with large databases. Other companies have moved into Software As A Service with applications that run across the cloud. Oracle’s customers have huge data centers and don’t need to move. Data protection is challenging in the cloud. The street has been looking to Oracle to increase its presence in the cloud. It is moving but not as fast as people want. He likes the business and it will get there eventually, but it will take more time.
The caller asked him to compare investing in ScotiaBank with investing in large cap American banks. In his 40 years in this business, most US banks have been bankrupt at least once, whereas the Canadian banks have not. The difference is the stronger regulatory system up here. He does own Morgan Stanley, which is a large US bank. ScotiaBank has been weak this year because of a few acquisitions and because of exposure in South America. There are fears that this might not do as well as expected. He is continuing to buy the stock but thinks it might be a few more quarters before people feel comfortable investing in South America. Events in Venezuela, for example, are causing disruptions in nearby countries, if only from the flow of emigrants.
He thinks the dividend is sustainable. This is a Amazon play--all these packages need tape. The company received a big insurance settlement a year and a half ago and rebuilt a plant, then they got good business from Amazon and the result was booming growth. In recent quarters, there has been some disappointment. Longer term, he sees the company as well run, as one of the two largest players in the industry and he expects it will be fine. He is buying today against a $28 target price. He sees a substantial capital gain potential if a few things go right.
Dollar stores are favored by the major retail analysts as still having growth opportunity. However, most Canadians see a Dollarama on every corner. They have a dwindling ability to penetrate the Canadian market further through more locations. This company has a big PE and high growth expectations, but its growth ability seems to be slowing. A small miss in this context can have an outsize effect, as appears to have happened to Dollarama this month. He owns a little bit, would not sell his stock at this point, but would not buy more until he sees that the stock has reached its inflection point. He would wait for a couple of quarters, looking at the company’s comments to understand how they now see their growth prospects. Dollarama has some other opportunities in other countries but has not yet shown that these will develop into significant growth.