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DOW is down 300 points at the opening today: It's a broad sell-off. The long-awaited correction is happening, but a correction never feels good when it happens even if you're expecting it. The market needed to sell off. It's a cleansing and good to get out of the way. China-US trade uncertainties and the US 10-year yield is over 3% are among the long list of reasons. The volality is the price we pay as investors. But it's uncertain that corporations will spend money with these ongoing trade tensions, thus freezing corporate investment. The S&P is barely up this year, but investors won't feel any gain. The TSX suffers pot stocks sell-off which is inevitable. They are higher beta. But even if the market wasn't selling off, cannabis would still come off--a correction in cannabis was due.
Healthcare names are defensive and a portfolio needs them, but JNJ is flat YTD. If your portfolio is light in defensive names, then consider this. Buy according to your overall portfolio composition. Consumer and medical product
divisions have modest growth. Pharma is its big driver of growth.
Over 10 years, this will be fine. Less than that, you will be unimpressed by the share price, though you'll be collecting a decent 5% dividend. BCE gives you stability, not price appreciation. Over the long term, expect an overall 7-8%
yearly return and there's nothing wrong with that. A low-beta stock long-term.
It's hard making money owning it. He's not sure why Canadians keep banging their head buying MFC, when you can buy the Canadian banks. He has no specific criticism about MFC, and in fact MFC is doing a lot of things right, like
moving more into wealth management and performing well in Asia, while diversifying away from insurance. But there's a disconnect in what they're doing and the share price, which has been ongoing.
A higher-beta bank name, because their revenues are mostly in Latin America where there are commodity-based economies and are thus more volatile. But the middle class is growing there, so there's long-term potential. You'll be fine if you have a medium- or long-term horizon, but challenging in the short. It's riskier than its peers. Also, it takes time to digest their recent large acquisitions in wealth management and to benefit from those synergies.
The conventional, safe American bank with a good balance between retail and investment banking. But we are in the late stages of the economic cycle. The U.S. economy is strong, but this year's gains were spurred by last year's tax cuts. So what's the catalyst for 2019? BAC's lending book has to accept more risk going forward. This isn't the time to load up on U.S. financials. Be cautious. We're late in the cycle.
Down 11% YTD. Don't panic though, despite their challenges. He still likes it. Look at your overall portfolio. If Broadcomm occupies say 4%, then you're okay, but not at 20%. Trades at a reasonable 11x P/E. Semis are cyclical, high-growth, but high-volatility. Now, we're in the down side of the cycle.
He's long owned it. The regional U.S. bank space has been under pressure. U.S. growth will be challenged going ahead. COLB is down 20% YTD, though the dividend is safe and the company has a good balance sheet. The stock is neither cheap or pricey now. How much overall exposure do you have to U.S. financials? Consider that. It should be lower than in past years.
Pays an attractive 5.1% yield. Interest rates are still low. The business has held up well vs. its peers where other utilities have sold off (i.e. Emera). AQN is spending money on growing its capacity and doing acquisitions. It's an integrated name from generation to distribution. They raised $2.5 billion last year that will fuel growth. They took 25% ownership in Atlantica Yield to get into the clean energy space. AQN is diversified. It's neither cheap or pricey, trading at 15x. It's part of an overall balanced portfolio.
(Past Top Pick Nov. 1, 2017, Up 41%) They have a good balance of corporately-owned stores and franchises. The former have higher growth and ROI; the former offer less growth, but more stable cash flows. You need both. Don't expect another 41% increase in the next 12 months. Yes, the stock price is higher, but so are its earnings. Likes it.
(Past Top Pick Nov.1, 2017, Down 19%) It's struggled this year, because of NAFTA concerns with worries of rising costs, and a decrease in bus orders. It's not at bargain levels now nor deeply undervalued, but is an attractive entry point. He continues to add to his position, but is slightly less optimistic about NFI now.
