WATCH
Likes the name, held in the past, sold a little less than a year ago. The stock is sold-off quite a bit, down 20% this quarter. Had some challenges with the new iPhone production and more recently the tariffs from Trump. Today Apple came out and said the new iPhone is the best selling iPhone yet. Starting to get more diversified, services side is growing very well and he likes that. Cheap. Trading at a lower multiple than it should at 13X forward earnings. Anything under 15X is worth a look. Wouldn't be surprised if they start to add to that name over the next quarter.
DON'T BUY
Strong brand. Demonstrated success pretty much in all businesses they are involved in. Prefers Brookfield Assets Management (BAM-T). The main question if you own it is what else you have in the way of interest sensitive names. Brookfield Property will be an interest sensitive name. He'd be looking at lightening up on the entire interest sensitive segment and make sure you're well positioned going into 2019.
BUY ON WEAKNESS
Has held it in the past but sold it too early. Had a great year, up 25%. Has transitioned from being a traditional network, switch and router business, to a more software focused business through acquisitions. The market places higher multiples on software companies then it does on hardware companies. He likes it. Had a real big run. You'll be rewarded buying it on weakness or bad news. (Analysts’ price target is $50.00)
WAIT
Likes it longer term, doesn't like it on the short term. Spent a lot of money over the last couple of years doing acquisitions here in Canada and also in Latin America. The next few years are really going to be a time for Scotia to digest their acquisitions and hopefully realize some synergies. He sees a challenging time for the share price while that's happening. Not in a rush to buy it.
COMMENT
Anything in the auto space has taken it on the chin recently. Prefers Magna (MG-T) primarily because of where Magna has made their investments, in electrification, driver autonomy and safety. Owns Magna. Feels the valuations are cheap but its going to be a challenging ride.
COMMENT
TD is probably the least value priced Canadian bank right now. You are paying for first-mover advantage in terms of the success they've had in the U.S on the banking side. Considerably lower yield compared to the other Canadian banks. Not a value play, but hard to argue about how well they are executing. It should be one of the names you own, but if you're looking for a bargain, TD would not be the name.
COMMENT
IBM (IBM-N) vs Microsoft (MSFT-Q) No brainer for him he prefers Microsoft. Microsoft is up 30% YTD, they are doing a lot of things very well. He would buy half Microsoft and half Apple and would leave IBM out of this. Microsoft is not cheap, Apple is cheap, so at least you are getting some value incorporated into the investment.
COMMENT
IBM (IBM-N) vs Microsoft (MSFT-Q) No brainer for him he prefers Microsoft. Microsoft is up 30% YTD, they are doing a lot of things very well. He would buy half Microsoft and half Apple and would leave IBM out of this. Microsoft is not cheap, Apple is cheap, so at least you are getting some value incorporated into the investment.
TOP PICK
Defensive pick. A U.S utility. Fully regulated space which means you have clear transparency on the cash flows of the business. Nice steady stream of income. Still reasonably valued. 3% dividend which for a U.S. name is quite high. Boring name, but he likes the valuation, but most importantly likes the fact that its defensive, and defensive will be a theme going into 2019. (Analysts’ price target is $51.14)
TOP PICK
Value play. It's been hammered, trading at around 10X future PE, cheap. The market is valuing their HCV business to basically zero, and that's the side of the business that's been hurt with the generics coming out and pushing the prices lower. Their HIV business has been doing pretty well. New CEO coming in, they have $32B in cash and waiting to see how this cash will be spent. Yield 3.3%. (Analysts’ price target is $86.95)
TOP PICK
Loves the pure play wireless positioning that Telus has. The more we do on our smartphones, the more we drive data usage and that translates into higher bill and more dollars and average revenue per user going up. Been spending a lot of money with expanding the 4G network and the technology. Feels that some of that capex is softening which is good has dividend growth investors, should see some cash come back to boost the dividend. Like the positioning and the valuation. Yield 4.6%. (Analysts’ price target is $50.77)
COMMENT
Market Outlook - A lot of normalization going on the Market right now. Higher volatility. Investors have been blessed with low volatility for a long while. This is kind of a reminder that volatility is part of the investment process. The US shows more average market valuations. The economy is still growing. Shorter term is surprising that a few words from the Fed can move the market so much. That is why he prefers to look at the fundamentals of a company. He prefers US banks over Canadian Banks now because of the growth south of the border. Still thinks Canadian Banks have a place in Canadian investors.
DON'T BUY
The are in the security systems. An interesting story but they don't have revenues coming in yet. He prefers companies that proved their concept with sales. They had just an equity event that was very dilutive to the existing shareholders.
WAIT
A name they cover and like. It has been growing nicely but now that the semi-conductor space has slowed down they are feeling the impact. You could wait to the next quarter as they said that next quarter sales are lower.
WAIT
A name he wants to like but their results are so volatile that are very difficult to gauge. They just won a decision against Apple so probably will have some cash going their way. He prefers to wait until they show some consistent cash-flows. (Analysts’ price target is $2.08)