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COMMENT
Arguably are looking at needing another correction. Revenues compared to last year are relatively flat. We are seeing a clear slow down in growth. So probabilities of correction seem to be increasing. Global growth is slow. We don't have China growing the way it used to. China was a driver to the global economy.
DON'T BUY
The Canadian telco's are a staple in balanced portfolios. This is not the same story with US telco's. They spent a lot of money making acquisitions leveraging up the balance sheet. The dividend is high. However, the share price has been range bound. So the performance of the stock has not been meaningful. He thinks the chance of AT&T raising their dividend is very low. They are selling off some assets to pay off some debt.
Telecommunications
BUY
It was one of the Canadian darlings but has suffered since. It got ahead of itself on a valuation basis. As soon as they had some bad news, the market really punished them. At these levels, they are real beat up and sees this as an opportunity. He thinks you will be happy owning this in a year's time.
Automotive
COMMENT
This is a huge engine that has continued to post strong numbers. They generate a lot of cash. This is a real growth stock. It is difficult to buy this stock at any reasonable valuation. It has never traded below 20X earnings over the last 5 years. It is a very low margin and is all about turnover. They generate about 25% of their revenues from membership fees. The business executes well.
department stores
COMMENT
Diversification within a sector? It makes sense to diversify within a sector. There are different business within a sector, however, they are correlated. Should limit one's exposure to a sector. We do not have more that 25% in one sector and no more than 5% in any one name. It is also important to look outside of Canada.
COMMENT
This is very much a yield, interest sensitive stock. Interest sensitive stocks have been on a real ride the last while. Transcanada has participated in this ride. Need to look at portfolio to see what percentage you have in other interest sensitive names and may need to trim. Most of the good news is already baked into this name.
oil
gas pipelines
COMMENT
He is bearish on commodities and has been for several years now. Last few years has been considerable underweight to commodities. He has held Suncor however, to get exposure to energy. This is a conservative way if looking to have exposure to energy. Again, need to look at over all portfolio from a sector perspective.
integrated oils
COMMENT
REIT's vs owning real estate. Can access housing, commercial, industiral, senior housing through REITs. They are very liquid, so if sector changes and you want out, you can easily get out of the sector. Not as easy as owning real estate. Would not look at owning real property versus REITs as the same thing. They have very different risks and exposures.
PAST TOP PICK
(A Top Pick Jun 27/18, Up 3%) They are in the home insurance business and more particularly title insurance. In the US housing markets, prices have softened. This has had a negative effect on this name. The title insurance premium charged is based on the price of the home. So this has hampered its stock performance. He still likes the name and it pays a decent dividend.
insurance
PAST TOP PICK
PAST TOP PICK
(A Top Pick Jun 27/18, Down 13%) They are a regional bank. They have had a challenging 52 weeks. He still likes the name and continues to hold it. It pays a decent dividend. It has been a sideways stock over the last 12-24 months. The balance sheet is clean. They did an acquisition that should be beneficial to shareholders over time.
banks
BUY ON WEAKNESS
They have been a rock star. Have held up well against Amazon. They are a big entity yet very nimble. They have had great numbers. They were one of the few companies that beat on Q4 and kept their guidance. Same store sales were up. They are doing everything right. It is trading at about 21X. The stock has had a real good run.
department stores
