COMMENT
Market Outlook All of Europe, Germany in particular, is looking soggy as exports dry up. US manufacturing is also slowing. We not facing recession just yet, however. Employment figures are showing a big division between service and manufacturing jobs -- service jobs outnumbering manufacturing by 10:1. The service sector is still growing, but wage growth is decelerating. He didn't think today's job numbers were disappointing as the jobs increased by 45,000 over the month. He is watching a US steel story. Tariff increases have led to farmers cutting back plantings, which has led to a slowdown in farm equipment purchases. You have to be aware of the unintended consequences.
COMMENT
His favorite US bank. Go big or go home. The best managed and smartest commercial bank. There is room to raise the dividend, although it is in the late part of the cycle. He is not seeing significant loan losses. A solidly capitalized bank making the dividend safer today.
HOLD
One of the three big bond rating services in the US. As such they have great pricing power and customers have to use you. When a bond gets rolled over, MCO-N will re-rate it. A great company with a great moat to protect it. He is happy to continue to hold it.
HOLD
One of the pioneers in integrated circuits. They are benefiting from the use of their circuits in almost all consumer and commercial products. A well run company. The dividend should be sustainable and able to grow. More of an income stock than a growth stock now however. Yield 2.8%
DON'T BUY
They have a number of huge problems, including the threat of class-action litigation and official prosecution. The contracting business does not seem to be able to make money. The assets are worth more than $16 per share. The issue becomes what is your appetite to accept other people's problems. He does not know if this is the time to buy. It could be the falling knife. He is nervous about it and is not buying.
DON'T BUY
The last garment business standing in Canada. Their success depends on the ability to move goods across the border. He always thought this was a story that was not going to come to a good end. Shipping from lower cost producers is just too prohibitive. He does not own it and does not see the value proposition.
HOLD
He likes them and owns it for clients. If you want to move things by rail there are only two companies -- the definition of an oligopoly with strong price control. The threat of an oncoming recession only offsets some of the need to move commodities. He thinks it will do just fine as a hold.
HOLD
A quick gain in 6 months? He is not a speculative trader -- he buys to own it 5-10 years. He thinks it is a great company and keeps selling more and more advertisements. It also has a host of lottery tickets that may pay off -- autonomous driving as an example. He calls it a must own.
HOLD
They had near death experience a few years ago and was saved by Warren Buffet. It was unfairly attacked by the OSC. History shows they do not make imprudent loans and their securty on loans has been fine. A recession may increase their cost of bad loans, but not in a threatening way. They do need to reduce their cost of funding, however. Through Oaken they pay the highest rate for GICs. The company is pretty safe now.
PAST TOP PICK
(A Top Pick Nov 27/18, Down 7%) He likes their low cost structure. Growth in air traffic from Asia will be big in the years to come and they are well positioned. They will continue to hold it. They do not own any Boeing Max787 planes.
PAST TOP PICK
(A Top Pick Nov 27/18, Up 31%) He continues to like them for many reasons. The cloud services, the app store and others continue to do well. It is indefensible and people keep buying their products. They increased iPhone orders for parts by 10% -- a good sign. His largest since equity holding.
PAST TOP PICK
(A Top Pick Nov 27/18, Up 5%) Trading commissions are going towards zero in the US and this is impacting them. He is still a big fan and likes the US exposure. The dividend on Canadian banks are very remarkable -- you have to own them. It was 1942 when the Canadian major banks cut a dividend.
DON'T BUY
You have to have a strong stomach to be into mining stocks. A recession causes this sector to sold off aggressively. He does not like that fact that miners are price takers -- they have little control over revenues. He likes companies like Apple that are price makers. He predicts HBM-T share prices will be volatile, especially since we are late in the economic cycle. He would stay away.
COMMENT
A real Canadian tech growth story and growing in the US. The question is does it have the legs to be a permanently profitable company? At some point investors need to justify the valuations. He thinks they are at the point to show that sustainability in profits. The IPO markets in the US have recently shown rejections for companies that have not demonstrated a sustainable business.
DON'T BUY
He is on the fence on this one. Fred Smith is not getting any younger. They have high fixed cost requirement as it holds as many airplanes as the major airlines. It has depots and trucks all over the world. The stock went down when Amazon announced they would begin their own shipping. He thinks they are a good company with a large moat around it. He would not jump in right now --it may be too late in the business cycle.