Daily Stock Opinions and Ratings

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Today, Jason Mann and Bryden Teich commented about whether BAC-N, CVE-T, CVS-N, BBU.UN-T, VET-T, WIR.UN-T, WPM-T, PXT-T, ECA-T, TRI-T, BXMT-N, KEY-T, ALA-T, AMZN-Q, TCN-T, GE-N, AAPL-Q, LB-T, TD-T, SU-T, C-N, JPM-N, ARE-T, GWO-T, WN-T, CPG-T, META-Q, TOU-T, BAM.A-T, RUS-T, MRE-T, WTE-T, KXS-T, CIX-T, OSB-T, ERF-T, ALA-T, FTS-T, CP-T, TOY-T, ACN-N, GS-T, MEG-T, LB-T, AQN-T are stocks to buy or sell.

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DON'T BUY

Considering the GM plant shutdown He held auto parts stocks for several years until the spring. He no lonege own this. This sector has had poor price momentum, and he sees continued pressure even after NAFTA being resolved. It's cheap at 5x PE. Has the weaker balance sheet vs. Magna and Linamar.

DON'T BUY

In no-man's land, trapped in weak cyclical stocks. Trades at 23% ROE and 6x EBITDA. Great, sustainable yield. But he prefers to buy stocks like this on the upswing, not the current downswing.

WEAK BUY

Which Brookfield stock to buy? Tough call, because they're always priced at a premium and they are prolific stock issuers (which could knock down a stock). He'd choose BAM'A: stable with good price momentum. BPY is his second choice. To be honest, he sees better value in non-Brookfield REITS and infrastructure companies.

COMMENT

All energy stocks have been hammered. TOU has good managers. It's cheap at 17x PE, but low ROE and missed a recent quarter. Their saving grace is their balance sheet. TOU is on the list of strategic acquisition for the big players.

WATCH

He owned it last year. It lost its price momentum but it cracked due to privacy issues and they missed earnings. All tech stocks have struggled since FB's earning report in the summer. But it's now reasonably priced. FB was never massively overvalued like, say, Netflix or Amazon. Great ROE at 28%. It's a little pricey at 18x PE, but it's expected to grow 30-40% in 2019. It's close to a level where he'd buy it again.

COMMENT

He had shorted it, but it's fallen too far, too fast. CPG's challenge is an asset base that isn't producing cash flow relative to debt (also facing many overlevered energy companies). Terrible price momentum and very volatile. He's neutral on this. He needs to cash flow return and momentum to stabilize to get interested.

COMMENT

Interest rates: why do Feds keep referring to historical rates? Historically, back to 1947 interest rates in the U.S. were 2.7% on the 10-year (close to current levels). Rates went from 2.7% to 7.7% over the next 20 years. Traditional bonds fared the worst, but stocks did fine, annualizing at 6-7%. So, stocks can bear rising rates as long as it's not a shock. That's why Powell and certainly Trump want a pause to see hikes digested. Interest rate cycles are nothing new.

TOP PICK

He's playing defense, expecting more volatility. It's really a holding company with businesses in real estate (Choice Properties REIT), the bakery and Loblaw. Very stable. This is a cheap way to play Loblaw, which has had a good run lately. Loblaw shareholders received shares of Weston and have been selling them. This has opened a 13% discount to its fair value. Price momentum is its only knock, but he sees a catch-up trade here. (Analysts’ price target is $110.59)

TOP PICK

As rates rise, lifecos do well. GWL is now a value pick with low volatility. He likes its middling price momentum and solid 21% ROE. 1.4x price to book (vs. historic 2x), and trades at 7x earnings. Pays 5% yield and deecnt payout ratio. But they need to show they can redeploy capital into growth--they got the balance sheet to do that. (Analysts’ price target is $34.50)

TOP PICK

It had a rough ride lately, because Ottawa killed a Chinese deal earlier this year. It now scores in the top 2% of his valuation. It's picked up strong price momentum. They have a huge backlog of projects. Well-positioned. (Analysts’ price target is $22.15)

COMMENT

The US Fed Reserve decision today puts the market on a different path for the rest of the year. Rates are just below the “neutral range” said the Fed, which caused a massive market rally. A rate hike in December is still probably priced in. He thinks the US Fed should be hiking with the state of the hot domestic economy. Trade tensions could heat up again with a weekend G20 meeting of world leaders. He thinks there have been positive statements out of the US ahead of the meeting that a deal might be struck with China – but expect the unexpected. He continues to like Canadian Financials and Industrials.

COMMENT

JP Morgan vs Citi Group – He likes the American banks. They took profit on JP Morgan a while ago although he thinks it is a more premium holding. CITI is a cheaper stock and he thinks they are planning to do a share buy-back. He prefers to own Bank of America.

COMMENT

STRONG BUY

It is a great time to buy. With a refinery they are not impacted to the same differential issues. He thinks oil prices will be supported with growing global demand and he thinks the Canadian heavy oil differentials with tighten next year. Yield 3.5%.

BUY

He owns TD and it will report tomorrow. This along with Royal Bank are the two premium Canadian banks. He expects earnings in TD to be as strong as that for Royal relatively speaking. Yield 3.5%.

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