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COMMENT
Market Outlook Earnings are always what drives the market. Q1 earnings dropped over the year and only 38% of companies reporting beat estimates. The sectors of growth are limited making growth slow going forward. Companies will get through it, but the short to mid-term outlook will face head winds. Real estate may plod along, but will not likely be a growth sector. Tech is the most promising, but it is so thin with opportunities in Canada.
HOLD
He likes this well managed company. They typically acquire companies at good valuations and expand the margins. They say the acquisition pipeline still has great opportunities. They just completed a $200 million bought deal. Some of their margins have tightened, which has impacted their share price recently.
food processing
WATCH
DON'T BUY
They deal with nuclear and biomedical waste with high degree burners. They just have not been able to find their niche. They are not ramping up growth to justify investing. They announced a $20 million contract that continues to be pending and the market is not that excited. He wonders if it is a one-time contract. Not quite there yet.
environmental
PAST TOP PICK
(A Top Pick May 24/18, Down 44%) They are transforming from a printing company to a packing company. They made an acquisition that still has not created traction. They spin off a lot of free cash flow -- about 17%. The valuation is only 5 times earnings -- very cheap. You could hold or wait to see some upside momentum to add new cash.
publishing
printing
PAST TOP PICK
(A Top Pick May 24/18, Down 12%) He still likes them. The recent quarter saw revenues grow by 35%. They are investing in the future by adding square footage, so earnings will be a little chunky. It trades 16 times earnings and they have 10 year contracts to manage casinos and there is no real competition.
entertainment services
PAST TOP PICK
(A Top Pick May 24/18, Up 63%) A well run company and great management team. Since 2009 they have hardly issued any shares. Their 5 year dividend growth averages 25% annually. One of the few retail stocks in North America doing well. It trades at 18 times earnings. He continues to like to hold it.
food stores
COMMENT
Cannabis He is starting to get a better feel for what the industry is going to look like. Companies are recording big misses on earnings and revenues, so it is hard to justify the multiples. It is a tough space still. They would like to see more care for the share count. He feels they are issuing shares like crazy since they are highly valued.
