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BUY
It is a core part of his portfolio along with two other banks. It will be feeling the recession this year. There will be a huge uptick in provisions for loan losses. But this one is reasonably reserved for any credit losses. They have a sizable provision. They have lots of capital and the shares are attractively priced. The dividends are attractive. There is a paid-to-wait prospect. It is a good entry point.
banks
DON'T BUY
This is a zero, although not priced there yet. That is where it is going. It has been a lousy company for a long time. Madagascar will prove to be their undoing. They defaulted on their debt in February. Their debt is currently worth 54 cents on the dollar so the stock is worth zero.
integrated mines
BUY ON WEAKNESS
This is a staple – apparel. It is one of the largest basic apparel manufacturers in the world now. Their manufacturing foot print is in the Caribbean. COVID-19 is ravaging these countries right now. The governments' ability there to lead is not what it is here in Canada. Probably it is going to be higher in a year's time, but you might get a chance to pick it up lower.
clothing stores
BUY
It is hard to know which is the better of the top three banks, all of which he owns. Most of their branches have re-opened. They were able to operate remarkably effectively even with most of their branches closed. He thinks the recession has given them an opportunity to further consolidate in the US. He thinks they are provisioned for credit losses adequately. Their discount broker platform is merging with a behemoth and will spit off about 800 Million in cost synergies when it is completed. TD-T is depressed right now and this is when you buy it.
banks
BUY
A big footprint in western Canada and it is a fairly non-cyclical business. The price of oil does not affect them the way you think. When oil prices drop sharply, there is a huge spike in their margins. It is a consolidator. They will be able to do these tuck-in acquisitions. He prefers ATD.B-T but likes this one too.
merchandising
lodging
PAST TOP PICK
(A Top Pick Jun 13/19, Up 13%) People are buying more on each trip. DOL-T is an essential service. Results yesterday were better than expected, even if down year over year. Same-store growth was positive. Earnings were under pressure because of cost pressures to deal with COVID-19. They are a strong retailer and the biggest dollar store in the country. This stock will be a beauty over the long term.
Consumer Products
BUY
He has it in an income account. It used to be thought of as a bond proxy and has those characteristics. There has been a change in mind-set among investors to see it as both income and growth. He owns the parent in his core portfolios. BEP.UN-T has a bright future. The management team is second to none.
Utilities
DON'T BUY
The airline industry is where barriers to entry were low to zero and capital always seemed to be high and barriers to exit were always high. It was a good area of the market for about 10 years. This is no longer the case. It will not come back quickly. It is not a great investment, even if there have been trades recently.
Transportation
Market. Markets are overbought after the lows of March. It has been a pretty breathless and relentless rally. He would not be surprised to see a pullback or pause here but it should be understood that we are not going back to the depths of the March lows. There is unprecedented fiscal stimulus from the federal government. The primary driver of the buoyancy we have seen has been the rapid and coordinated and unprecedented response from governments and central bankers around the world. He thinks it is not likely that these will be withdrawn. This is just the sharpest and shortest recession of our lifetimes, not a depression. Trump will likely do whatever it takes to get re-elected and might play the China card. COVID-19 is no longer the primary risk to markets, but rather central banks stepping away, the election and the overbought nature of the markets are the primary risks.