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COMMENT
No, we won't return to March's lows, but investors must fall the situation carefully, like how restrictions are lifted and how consumer behaviour changes. The market got way ahead of itself in April-May, partially due to massive government stimulus, FOMO, vaccine hopes, etc. He's sitting on 10%, holding a lot of utilities and telecoms. This retracement from the rally is normal. Watch for Q2 results in July-August--we will really see the impact of this virus. There will likely remain little corporate guidance. He's cautious. Pick your sectors and individual companies carefully, not broad indices.
BUY
They're now spending a lot to grow their wireless business and fighting off Telus. The telecoms are good investments now; they're defensive names.More people are at home using bandwidth, though gaining new phone users may be limited. You're paid a 5% dividend. You can but now. It's a duopoly out west, so little competition. He owns its peers instead.
STRONG BUY
He owns under 10% of this company. A Quebec juice company bought 20% of this and plan to increase distribution of their wines across Canada. Bar sales and winery visits are down, but online sales are through the roof and so are Ontario liquor store sales, topping Ontario wine sales. Future distribution expansion will bode well. He bought a lot of shares recently.
BUY
Institutional investors keep buying this, so it's held in very well. They're a global player, selling in Europe, Asia and North America, enjoying high margins. HTL has been buying small players in a fragmented industry. They enjoy good organic growth and their recent report was positive. There may be softness in coming quarters due to the lockdown, but this is temporary. The whole sector trades at a high multiple, but he likes this company and its management.
0
HOLD
Good managers who own a lot of stock. The stock has been rangebound for years as they payout a lot of its cash flow. Broadcasting has its challenges, though. ET are leaders in their space, but they serve a limited audience, which keeps him away. If you own it, hold on and watch what the owners do with their shares.
electrical
electronic
PAST TOP PICK
(A Top Pick Jun 03/19, Down 48%) They've grown their sales a lot over 5 years and improved margins. In March, they cut the dividend to accumulate cash to build a second line in Delta, BC, and this stunned the market, because the company had already spent a lot on the first line. Some investors sold. SWP announced it must move out of the old plant within 3 years, which concerned the market. They made decaff coffee without chemicals, and they have no competitors. This market is growing globally; SWP sales volumes keep growing. Horton's is one customer.
agriculture
PAST TOP PICK
(A Top Pick Jun 03/19, Down 22%) Are the second-biggest supplier of scratch lottery tickets. Are only 3 players in this space, and PBL is increasing its market share. It is expanding into technology (internet lottery) in the U.S. Scratch ticket sales are up YOY, despite the pandemic. Their bingo halls are reopening now. Generates great free cash flow. Grows organically and by acquisition. He'd still buy.
INDUSTRIAL PRODUCTS
PAST TOP PICK
(A Top Pick Jun 03/19, Down 33%) Bell announced a deal with them today. The threat of cybersecurity has increased as more people work from home, and BB is the leader is enterprise security software. BB also leads in car entertainment and driver assistance software. They are a pure software play now with $1-billion in revenues, mostly recurring. He doesn't expect Fairfax to buy BB, but thinks there is a shareholder review now to enhance shareholder value. He feels BB is grossly undervalued. Trades at a low 2.5x revenues. BB boasts recurring revenues and high margins, too.
electrical
electronic
DON'T BUY
It's not his type of stock, because it trades at a huge multiple and doesn't generate revenues yet. But he traded it in the spring and made a quick profit--he couldn't resist. It fell so far and rose so fast. They have a good POS system, but depend on restaurants and bars which of course are a challenged sector. He expects a slowdown for LSPD in coming quarters, so watch their future guidance. The valuation is too high.
Technology
HOLD
He likes utilities; defensive and paying good dividends in a low rate environment. CU depends on Alberta, which is challenged by oil. He prefers Fortis and Boralex, Innergex and AQN-T, which will maintain or increase current stock levels. If you own this, hold it and wait for a recovery; the dividend is safe.
electrical
electronic
