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Market. We are in a bull market correction. The fed is forecasting 4 hikes and the market is saying it should b 2.5 hikes. The market is not willing to move up until the Fed acknowledges that may have to reign in their expectations. There should be volatility next week in the S&P, going down another 75 points. He likes the market here. He thinks we will have a year-end rally. There are pockets of overheating in the US labour market but with oil prices coming down that should ease the situation. He is seeing great value in Canadian stocks but foreign investors continue to short our market. The tax break last night will help the Canadian economy. We need help out west with our hydrocarbons, however.
TOP PICK
It is going to be more offensive going into 2019. There were so many headwinds on the company. There will be more oil getting out of Canada and this should be a good thing for oil. They reduced their debt. They are checking all the boxes. They say they are going to grow the dividend next year by 10%. Here is a place you can get total returns of 12-13% in the next 6 months. (Analysts’ price target is $53.83)
oil
gas pipelines
TOP PICK
They do not have a data privacy overhang like lots of other FANG stocks have. They pivoted themselves to the cloud. They are doing good things for the enterprise. They pay a pretty good dividend. The stock will continue to grow at 15%+ for the next while. If you get this next week or so on the pull back close to $100, that would be good. (Analysts’ price target is $125.77)
computer software
processing
PAST TOP PICK
(A Top Pick Jan 10/18, Down 30%) They had about 5 years straight of bad performance, then half a year up and then back to the old ways. It is probably the best French bank. They will spring higher if BREXIT gets a check mark and Italy solves its budget problems. They will always trade at a lower multiple than North American banks because something always springs up in terms of a headline risk.
0
HOLD
They are still guiding for 8-10% earnings growth. They are stable. They should be able to grow the dividend 4-5% a year. It is off along with the market. This and MFC-T are global companies now. MFC-T looks cheaper so he would buy that over SLF-T, which is trading at a 10% premium to its market multiple. Don't sell it.
insurance
BUY ON WEAKNESS
He owns a lot less of all oil companies than a couple of years ago. It is a tough business because you can't support your revenue line. They are good stewards of capital. Under the right circumstances, this would be a stock to buy. You have to be patient with it. The discount in crude will narrow back to its long term average. He does not see Line 5 in Michigan being shut down, as the democrat rep there has promised.
Oil and Gas (Integrated Oils)
BUY
He likes it. He bought it mid-year in a fund he manages. It is below what he paid now but represents pretty good value. They are going through a proposed merger which should be finalized by the end of the year. There are too many pharmacies out there. Pricing is also a headwind, as is food. They are doing a vertical integration with other health care companies. It is probably a $75-$105 stock. It is a defensive part of his portfolio. With the dividend it should make double digit returns. (Analysts’ price target is $92.00)
specialty stores
BUY
It is a natural gas producer. He likes the setup for Canadian gas stocks. He bought in the fall. We are starting to get a cold winter. It set a record in Toronto last night. KEL-T was highlighted to him this week as one that gets a pretty good price for its gas and he recommends it also. He likes the gas trade here.
oil
gas
RISKY
Shorting Natural Gas. The only way to do that here is NGA (*Speculative Short*), which is US NYMEX gas. It has spiked up so will probably swing back down half way. You are making a speculative bet. He is more bullish on Natural Gas longer term. HND-T is a shorting ETF that resets every day. It is very volatile. You should only hold it for one day.
