WATCH
It is a binary situation. If anyone can turn around the company it is the new CEO – his track record is incredible. The power division remains weak and the capital side is under reserved. He would wait to see improvement.
COMMENT
This is one of two spin offs from Honeywell. This company is less than 1% of the market cap of Honeywell. It trades at less than 3 times earnings. One of the overhangs relates to asbestos in the brakes division. The low PE foretells doom. The company has top market share in auto turbo-chargers and that segment is growing.
TOP PICK
He likes it because nobody likes it. It is former Valiant Pharmaceuticals and trades at 6 times cash-flow. He encourages investors to look beyond its checkered past. It has high quality recurring cash-flows in the contact lens division. Every division is growing organically. It does have a high debt load, but the trajectory of cash flow will elevate that risk. Yield 0%. (Analysts’ price target is $35.39)
TOP PICK
This company is involved in colonoscopies and aggregates businesses in that space, mostly in the US. It trades at less than 10 times free cash-flow. He expects growth from organic tail winds in the procedure space. Acquisitions are done within existing cash flow. Yield 0%. (Analysts’ price target is $6.08)
TOP PICK
A spin-off of Brookfield Asset Management. For every 170 shares of BAM-T one owned, they received one share of TSU-T. They underwrite smaller BTB insurance. They can sell-off re-insurance for a recurring fee stream in the US – a process called “fronting”. On paper it looks like they operate at a loss, but it will be prove up in time. Yield 0%. (Analysts’ price target is $32.00)
COMMENT
Markets. An improvement this week. Canadian markets could still catch up this year, if we can get energy onside. Some stocks are down so far, he could see them coming back 50-60%. There's lots of potential, but he's not bullish on energy until the world changes its mind. Good value in the sector, but may be 6 months to a year before people realize that.
COMMENT
What's going on with interest rates? Powell did change the game, but not as much as people think. We're amazingly free from inflation, so there's not the same incentive to push things up. We got too far ahead in terms of interest rates. We could stay at 3% for a while, so stocks will do OK. If the curve starts to invert, that would indicate trouble ahead.
COMMENT
US economy. US economy still has some steam in it. Deals are getting done, so cycle could carry us well into 2020. There's still infrastructure spending to come, which could extend the cycle.
WAIT
Good company that he's been following, though hasn't put any money in yet. Lots of business is offshore, Europe and US mainly. Waiting for it to pull back, and it hasn't because they keep producing good results. It's a bread-and-butter business, a problem-solver for businesses.
HOLD
Real problem with energy and its stocks is that the psychology is totally negative. Until we see the horizon clear with oil price and supply, be very cautious about putting money in. If you hold it, you can continue to do so. (Analysts’ price target is $5.63)
COMMENT
More of a utility stock. Predictable and relatively safe dividend, with no significant problems. Not excited about the sideways growth.
BUY
Spread around US. Latest acquisition was in the US. A bit bumpy, but they've done an excellent job at running the company. Utilities are the place to go for reasonable dividends. With the uncertainties right now, utilities are not a bad buy. The selloff in utilities based on interest rate fears was a knee-jerk overreaction.
COMMENT
Doesn't have the same political problems as larger pipelines, as it's just in Alberta. Has suffered along with the rest of the sector. Excellent yield, last quarter was good. Doesn't suffer hugely from the price of oil, as you still have to move it. Yield is 8%.
BUY
Banks have taken a bit of a hit recently in the market, as people moved away from equities. Last quarter was excellent. He prefers TD because of the US holdings, but you could buy any of the banks now. 2% growth is good for the banks. (Analysts’ price target is $110.00)
WEAK BUY
Reasonable dividend, though not as good as the banks. If you want a financial outside of the banks, this would be his choice in the space. Yield is just over 4%.