BUY ON WEAKNESS
If you want good global REIT exposure own PLD-N. WIR.U-T raised equity and this has resulted in a share drop today. This is not a high conviction name -- you don't have to own it. We have gone through the most bullish industrial run up over the past few years and we have not seen their cash flows really increase. He is starting to see supply of industrial space increasing and some of their leases expiring soon -- this could challenge their cash flow going forward. He would buy on a pullback.
HOLD
The biggest apartment REIT in Canada. A good, liquid way to play the fundamentals in this space. Global analysts see the GTA of Ontario a great market area, right up there with India. He wonders what their rental rate growth might be going forward. A good name to hold.
TOP PICK
The spin off MGM Resorts -- the casino operator. The properties are leased back to the casino operator. The lease is low cost to the REIT. A strong business set up for the macro risks out there. A relatively new REIT structure that could catch on with investors. Yield 6.27% (Analysts’ price target is $35.73)
TOP PICK
They operate RV and manufactured home parks -- a true land business without large capex requirements. Rents can increase substantially. Yield 1.97% (Analysts’ price target is $144.00)
TOP PICK
The largest owner and operator of temperature controlled warehouses in the US. Part of the food supply chain -- on trend. They are partnering with the largest food suppliers in the US. Yield 2.12% (Analysts’ price target is $39.79)
COMMENT
Markets are swayed by sentiment, optimistic today going into tomorrow's trade negotiations. She doesn't think it will be an all-encompassing deal, perhaps at least a stop in tariffs which would be positive. The trade war is impacting the world with two quarters of US contraction in manufacturing as well as in Europe. Overall numbers are starting to soften. Some progress in trade is needed. FedEx is a proxy to the trade war, but they bought they bought a European transport company, but need to invest more money and take more time to integrate them; also European economic softness doesn't help. Meanwhile, online commerce means more business-to-commerce, so FedEx and UPS need to invest more there. The US consumer remains very strong, and wage growth is rising. Consumers have some money in their pockets, so Costco is benefitting.
DON'T BUY
Pays a good yield, but there isn't much growth. She wants utilities for the yields but also cash flow growth. The Ontario government still owns 47% of this company so it's possible they could sell down and get involved in the company's operations.
COMMENT
She's done very well with it. Litigation about opiates is the overhang, and just got a negative ruling on their anti-psychotic drug. Their drugs are doing well, but there are a lot of negative headlines. They may continue selling off troublesome drugs. They remain very profitable but also volatile.
BUY ON WEAKNESS
All utilities have done well in 2019 and renewables will continue to grow. BEP also has global presence. Wait for a pullback to get in.
DON'T BUY
Outlook depends on global growth which as been decelerating. Teck is paying off its debt though. She holds very few cyclicals, including mining. She won't touch base metals until the global economy improves. We're late in the cycle.
COMMENT
Metro vs. Empire She owns Loblaw instead. The sector is defensive, so it's done well this year. She likes Shoppers Drug Mart, hence Loblaw, for its cross-selling via their Optimum rewards card. She prefers Metro of the two, but thinks Loblaw is better.
BUY
They are in defence and business jets. They're not recession-proof, but their customers are rich who will continue to buy in a recession. The price is attractive now. Trades at a low 15x forward earnings.
BUY ON WEAKNESS
Very well-run, but too expensive now. When the valuation lowers, she will consider it.
BUY ON WEAKNESS
She used to own it for years. She's waiting for it to fall below $100 to re-enter. It used to trade at a discount to peers, but now more than its peers.
COMMENT
She owns Visa instead; it has a stronger growth outlook, especially in Europe. AmEx provides the credit when you use their card whereas Visa and Mastercard provide just the transaction as a bank offers that credit, so the business dynamics are different. She prefers the asset-lite model because it offers higher returns.