Market. The growth names are in the US. Canada is seeming good valuations, especially within the lifecos, banks and energy stocks. With interest rates potentially going up and the Canadian government not being pro-business, the lack of growth in the Canadian markets could continue. We have to be cautious in the NAFTA negotiations to not show Canada as being against business development. The cannabis sector seems over valued in Canada and he warns of further potential downside – play it smartly. Some of these new companies will be bankrupt in a year. He is watching the US 10 year bond yield with only a 25 bps spread with short term rates as a potential warning of an upcoming recession.
Warren Buffet saw value in this company that offers non-conventional financing. Longer term they will likely need to add a dividend. The topping of the residential market may mean the upside in this company could be limited. He would suggest holding some of this, although there are others with less risk and lower volatility. Yield 0%.
A too-big-to-fail bank that they continue to recommend. They have been able to get 13-14% ROE through every market gyration following the 2008 financial crisis. Their business strategy is more conservative today and the multiple trades at good value. He expects the dividend to continue to grow and the PE is only 11.4. Yield 2.4%.
The PE is around 17 with a payout ratio of 80-90% -- very high for a telco. They are in a good space in Canada and the stock may be impacted by the general move towards bonds. He is fearful of increasing regulation in Canada. The dividend is safe, he feels. Yield 5.8%. (Analysts’ price target is $59)
He thinks high quality producers are going to do well, but he is more bullish on oil than natural gas – TOU-T is 70% natural gas. He would look to others like Surge, Baytex or Vermilion. You want a company that can increase monthly production and monthly profits and this one has failed to demonstrate that.