Today, Bruce Murray and John O'Connell, CFA commented about whether SWK-N, BNS-T, KEL-T, ATVI-Q, EA-Q, FTS-T, EMA-T, AAPL-Q, GS-N, KRE-N, 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, CELG-Q, META-Q, VET-T, BAC-N, ALA-T, DIS-N are stocks to buy or sell.
He owns this in his dividend fund. It is a well run company. The market for TV studios is very limited. The company is profitable and every couple of years, they pay an extra dividend. He likes to buy it below $15 and either sell it in the $20 range or collect the large special dividend. It normally offers a 3.5% to 4% yield (current yield is 4.3%), but every 2-to-3 years, it pays an additional dollar, which works out to be an extra 5 to 10%.
Comment on Preferred Shares and Royalty Companies. He would not own preferred shares because they are debt at the end of the structure and they offer no upside. He would rather own high-quality debt or high-quality companies that can grow their dividend. Royalty companies also offer income. They are a preferred way for institutions to own gold companies because they diversify the risk of actually owning the mines. Gold-royalty and oil-royalty companies are often very expensive. He thinks they are OK but there is no story to drive them other than the commodity itself.
This is a recent acquisition. The backlog of orders for Boeing and Airbus is tremendous. He thinks China will favor Airbus over Boeing in future orders. He thinks the Bombardier acquisition gives them an advantage over Boeing across the fleet. They are also setting up a new maintenance service, which might take over work currently done by the airlines. This is a good extension for a capital goods seller. Yield 1.4%. (Analysts’ price target is €120.57)
It is extremely well managed. The stock is really cheap. The forecast is up to $11 per share of earnings and the stock sells for only $60. There is substantial free cash flow. There is a significant order backlog for the next couple of years. He expects it to grow further. The fears holding the price back are Free Trade and also the auto cycle might not last. Linamar took on some debt when they bought a privately owned farm machinery company and when they bought Skyjack, a hydraulic jack lift company that has hundreds of millions in sales and will do very well in the US. They have expanded that business beyond lifts. The company is very advanced. They offer several electric drive products and have won contracts with manufacturers for electric vehicle parts. He thinks investors could double their money in 1 or 2 years without much risk. Yield 0.8%. (Analysts’ price target is $80.56)
Don't sell it. Hold it. We're finally seeing rising rates benefit the banks which are well-capitalised with good profits. The American consumer is still strong. US regionals don't need to worry about international trade tensions, though consumers could get hurt by tariffs. Good capital return and stock buybacks. ON KRE has been slumping, so yes, it's been frustrating. Consider the regional bank, PNC Financial, though.
(Past Top Pick, June 14, 2017, Up 3%) His favourite US bank is Goldman Sachs. Trading at 10x earnings, at a discount to its peers; their earnings should grow 15%. They follow a well-diversified model. They won't increase share buybacks or capital, because they need the cash because they are growing so fast. Pays a dividend of 1.4%. They make money in difficult times. US banks as a whole have been stuck the past well, but GS has been doing everything right.
(Past Top Pick, June 14, 2017, Up 53%) He's excited about its long-term. Apple remains innovative, and that will continue in AI and VR. It's a huge revenue generator, so it increases dividends. Their service business is growing rapidly. Their computers continue to sell at a premium. He expects stock buybacks of $180 billion in the next three years, so EPS will continue to rise. Don't focus on the number of phones they sell each quarter.
Emera vs. Fortis Emera doesn't have enough capital to fulfill its growth plans, so they need to raise it while they pay a 5.6% dividend--difficult. He prefers Fortis, which is better capitalized with better growth prospects. But they're both slow growers, not super-accretive. For dividend growth, look to a Canadian bank instead. Dividends: 5.6% vs. 3.9%
Emera vs. Fortis Emera doesn't have enough capital to fulfill its growth plans, so they need to raise it while they pay a 5.6% dividend--difficult. He prefers Fortis, which is better capitalized with better growth prospects. But they're both slow growers, not super-accretive. For dividend growth, look to a Canadian bank instead. Dividends: 5.6% vs. 3.9%
Can't tell its short-term prospects. They've been struggling, but in videogames he prefers Activision Blizzard (ATVI-Q) that he owns; they make the best games. They're getting into the battle royale market with new games. All videogame companies have been under a cloud because of this Fortnite controversy. He expects a 20% in ATVI in the next year.
As with many other small startup utilities in Canada, they have done quite well with alternative energy. He thinks that current governments are likely to reduce or stop their subsidies, which will affect the growth of these companies. Algonquin’s dividend is dividend is 4.9%. It seems reasonably priced. They have some backlog, so there is no reason to fear this stock. He would prefer a slightly higher yield for his dividend fund.