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COMMENT
Breaking news: US Fed Chair Powell has just commented, urging caution, that the impact of hikes is uncertain. The Fed pause narrative has picked up steam. We will certainly get the Decmber hike, but may take a pause after that. Growth stocks have dominated almost every investing style until the past few months and is now done. He sees more rotation into profit-oriented stocks. Inflation has come off because of the falling price of oil.
COMMENT
Husky Energy is bidding for this at $11/share and trading at $8.01 today, so if the bid is approved, will a shareholder get that $11/share buying at $8.01? No, because it's not a cash bid, but a hostile one in shares at 0.57 shares of Husky. Meg is tracking Husky down. It's now trading at a 60-cent implied discount to the Husky bid. He expects this deal to go through. Meg is worth about $8.60/share in terms of Husky shares, then you'll end up owning shares of Husky, then you can decide what to do with them (hold or sell). So, you'd buy shares of Meg, short Husky and hope to pick up that 60 cents when the deal closes.
oil
gas
HOLD
Its challenge is poor price momentum, especially during tax-loss selling season. However, its valuation is cheap, scoring in the top 5%. Trades at 6zx cash flow. Not a growth stock anymore. But at this price, it's good. It pays 9% dividend yield with a 78% payout ratio. Don't sell it here; it's too cheap.
Financial Services
BUY
Its price momentum is moving high during a shift to defensive stocks, though lately the market feels that interest rates won't rise as fast as expected. If so, then dividend payers have been overpunished You could own this defensively. A very stable stock. The only knock is it's trading at 13x EBITDA with a lot debt.
electrical utilities
DON'T BUY
Dividend is over 15% now; it keeps rising because the stock keeps falling. He's short it. It's getting to the point where it's a dangerous short, because it's fallen so fast. It scores at the botom of valuation and price momentum. Balance sheet is okay. Aside from shorting, he wouldn't buy it. He wants to see the trend turn up to buy it; and he wants to see improving earnings.
oil
gas
PAST TOP PICK
(A Top Pick Aug 22/17, Down 26%) Pared back his holding. High 42% ROE, but the market doesn't see it as a growth stock; their Century acquisition was over-expensive. It's good that they're buying back shares. It's very cheap now, but has terrible price momentum. He needs to see a bottom with this stock.
investment companies
funds
