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COMMENT
Market Outlook He thinks the washout lows of December are now oversold. He expects a full rebound into March and perhaps into September or longer. An inverted yield curve typically results in a market rally for nine more months. The trade overhang issues will continue, particularly on the technology side. He expects patent battles with China to continue. On a 200 day moving average basis only 11% of US stocks were trading above the long term average -- similar to 2011 and 2016. This has resulted in PE ratios becoming much more reasonable. He has 6 "okay to buy" dividend strategy stocks right now -- so he is waiting for the all clear signal to come.
HOLD
This company focuses on natural gas incinerator technology -- making it a very good fit for a tight US regulatory environment. EPS is expected to $0.48 in 2019 -- double the 2018 rate. This would make a 6 times PE multiple -- very cheap. They are working on portable units which will make them even more efficient. They are working on taking the heat from the natural gas to vaporize water to generate electricity adding to further efficiency. They are entering the sweet spot for their business he thinks.
oil
gas field services
DON'T BUY
Overall the health care sector is a good one. EPS are expected to be $0.01 in 2019 -- making the company basically break-even. They also provide bulk purchases in a pharmacy setting with a technology application for each customer. They plan to expand into Quebec. It is not a stock to be buying just yet.
other services
COMMENT
Dividend trading strategy You must look at a company's trailing four quarter payout ratio. If it is less than 75%, it is a buy. If it is above 100%, then it is a sell as the dividend is not likely sustainable. The earnings growth is also important to be able to sustain the growth. This generally results in his picks averaging less than the market average yield.
COMMENT
Canadian dollar outlook. He thinks the Canadian dollar is likely headed lower -- based on recent technical analysis. It is usually a reflection of what is going on in the country -- with oil prices looking weak, he is not bullish. He is not expecting the Notley government's production constraints for January to have much of an impact on the dollar.
DON'T BUY
The dividend payout ratio 46% of trailing cash flows. Sales growth was up 57%. Earnings growth have been reduced lately. The PE ratio of 16 times is reasonable and the company is cash flow positive. He thinks the dividend is safe, but the slow down in earnings growth would keep him from buying this. Yield is near 10%.
oil
gas
DON'T BUY
The concern is with recent earnings which recently reported a decline of 10%. The payout ratio is only 65% and dividend growth has been increasing. He does not own at this point, due to it trading below a significant moving average. The ROE around 8% is too low for him.
Energy Infrastructure, Industrials & Utilities
DON'T BUY
The CFO has recently moved on and there is no reason for his departure. The technology is good and they have built a new facility in China. Recent financing has been very attractive. He expects their crystals to be purchased for medical scanners in China and expects good things going forward. There has been no insider buying -- a red flag to him.
Consumer Products
COMMENT
Cobalt is a partner commodity in the production of lithium batteries. Earnings are expected to be negative in 2019. Cobalt prices have risen sharply, causing manufacturers to find a way to move away from using it -- nickle may replace it (as an aside Sherritt could be a potential benefactor of this). He would consider selling FCC-V in favour of XBC-V (who focuses on garbage dump gas extraction).
Mining
