WATCH
It performs well in November and December and not in January. It will set up now for a good buying opportunity at the end of January into the end of April. We are at a base of support as we come into a second period of seasonal support.
TOP PICK
From late Jan unto the end of March the stock does really well. They have a niche in the retail sector. We saw a big correction take place so it has a good opportunity. They outperform the S&P 88% of the time in the seasonal period. It is an off-price apparel company and if we get into tougher times, then consumers will have to move down market. (Analysts’ price target is $53.62)
TOP PICK
It has a strong seasonal period from late January into May and then they do poorly. It is a solid company with a 3.3% dividend and a low PE ratio. It should perform well when the trade situation calms down. (Analysts’ price target is $93.79)
TOP PICK
It got hammered. It is a seasonally strong time for small caps from the end of December into the beginning of March (7th). Tax loss selling brought it down. Revenues are focused domestically in the US.
COMMENT
2017 saw the lowest volatility and nowadays it is mean-reverting. We had 10 years of very low interest rates. When the central banks take away this liquidity, that results in a lot of volatility. Historically, when central banks pause (or reverse rates) it's scary, and central banks are doing that now. When the cycle turns (which he believes is happening now), who will buy the riskier assets out there? This worries him, referring to the October 2018 sell-off. He feels the credit cycle has tipped over, and in a year from now there'll likely be a Canadian recession, and within two years a global one. He expects more downgrades coming in the next earnings season. It's not the time to panic-sell, but when you see a rally in the market, lighten up your stocks.
COMMENT
The leading way way to play phosphates and potash in North America. He likes NTR, but because he's a mid-cap manager (and NTR is large cap) he prefers IFOS-X in this space within this cycle.
BUY
It looks cheap and the balance sheet is not distressed. He likes it here. The risk/reward is good. They have quality crude and get better pricing than its Alberta peers.
BUY
Loves it. One of his biggest holdings. It got hammered, but actually holds net cash and generates $4+/share. Incredibly cheap. They get Brent Oil pricing, another upside. It'll go back to mid-$20's.
SHORT
Not his favourite cannabis stock. They've diluted shares and are buying another company, which tells him that they're buying with stocks, not cash, which tells him that management believes their company is overvalued. ACB is very high compared to its peers. He's shorting it.
PAST TOP PICK
(A Top Pick Mar 26/18, Up 97%) They smartly bought some spectrum rights a few years ago, and now they're on the fringe of the 5G spectrum. So the value of their spectrum rights will be realized later this year. He took profits, and would be lightening up on this now as the stock does well.
PAST TOP PICK
(A Top Pick Mar 26/18, Down 30%) Also a top pick, so he'll comment there.
PAST TOP PICK
(A Top Pick Mar 26/18, Down 54%) He slightly reduced his position, but still holds it. They got into a business agreement with Sun Pharma, a bigger company, that was distributing one of the biggest drugs. They did a big promotion last year and the stock did very well, but they stopped promoting it. The inventory built up and their orders to Cipher dwindled to almost nothing. CPH stock got punished. They've since solved it with a long-term supply agreement. Also, they have two new drugs approved in 2018 with at least three more in 2019. The founder just bought a bunch of shares, which is a good sign.
BUY
It'll do well in the market he forecasts--a difficult one, and investors will bid up stable companies like Fortis that don't depend on cyclicality. OPne of his biggest holdings.
DON'T BUY
The dividend isn't safe given company turmoil. They're converting Alberta liquor stores into cannabis retail, partnering with Aurora. This is a speculative play and a logistical challenge. It's difficult to run cannabis retail when you have no product to sell. The upside is that Aurora could just vertically integrate and own the entire channel.
BUY
Precious metals will be a safe sector in the coming cycle (economic weakness). SIL has one of highest-grade silver developments in the world, and a prime takeover candidate.