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Today, Greg Newman commented about whether BIP.UN.TO, POW.TO, QBR.B.TO, BPY.UN.TO, CSH.UN.TO, AQN.TO, FDX, ECA.TO, QSR.TO, DIS, SHOP.TO, EIF.TO, CSCO, ALA.TO, FTS.TO, ENB.TO, TA.TO, GIB.A.TO are stocks to buy or sell.

Thursday, August 20, 2020 Wednesday, August 19, 2020 Tuesday, August 18, 2020 Monday, August 17, 2020 Friday, August 14, 2020 Thursday, August 13, 2020 Wednesday, August 12, 2020 More...
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COMMENT

It's a head-scratcher: Why is the market in a V-shape when the general economy is doing poorly? Answer: Government liquidity and really low interest rates which allow the market multiple be a lot higher. Tech stocks have had a great run, but now this is a tale of two stock markets, between tech stocks and others like airlines. Some stocks like BCE, Telus and BIP stocks are paying 5% dividends, so you can sit and wait. Valuations on some stocks are super-high now, but on a 2022 basis when we come out the virus by then (we should be) are not that bad, given super-low rates. Another strong tailwind are investors who invested in commercial and residential real estate and gun-shy in those areas now, so that makes the market more desirable. Goldman Sachs today raised its S&P target by another 7% for end-2020. The market wants to go higher. Some investors have misjudged this rally all along. Don't go into more tech stocks at current extreme valuations, but find value in stocks like Power or Pembina as we head into a recovery.

BUY

They just beat their Q3 based on strong 96% recurring revenues across all service lines. Its 2020 outlook is muted, but he sees good growth into 2021 as firms spend more on IT. Strong balance sheet and acquisitions are a big part of their strategy. It'll grow at 9% EPS at a decent 15x multiple into 2022. He keeps adding and it remains good at current stock prices. This continues to benefit from stay-at-home work.

BUY

Just had a strong Q2 and reinforced their guidance. There's an extra $3 of value here. Brookfield just made an investment. Has a great balance sheet. Renewables are a hot area, too. With their cash, they can buy back lots of shares. Trading at a 15% free cash yield vs. 9% from its peers.

BUY

Pays a 7.5% yield that's safe. True, the stock hasn't moved lately, but you're paid to wait. Trades at a higher free cash yield than peers. Balance sheet is getting much better. 70% payout ratio, so yield is fine. The only risk is line 3 and 5, which may or may not happen. The stock will do well if they don't get those lines going.

BUY

Fortis vs. Altagas ALA is riskier, but it's starting to come into the cycle so, it's doing a lot better. Fortis is a steady-eddy withe nice free cash flow growth and trading at an okay 17.4x valuation, in line with AQN. They hold a lot of renewables, so it will do fine if Biden is U.S. president. It has US exposure. he likes them. He prefers Fortis. Some money has flowed out of here, so it's not trading at the top. With interest rates being a lot lower than before, all these names can trend up 10% in the future.

COMMENT

DON'T BUY

Recent earnings beat, but the market didn't like it. COVID is hurting them. Their business is focus on on-premise tech while peers are the cloud operators. Cisco is migrating to the cloud late. 14x earnings with a nice dividend, which is enticing, but can they make their growth rate? The risk-reward isn't here. This could turn into an IBM and could take years to turn this ship around. This could be a value trap.

DON'T BUY

Take the money and run. Heavily levered company. 80% of their business is in airlines. You can but this cheaper for the coming 3-6 months. Trades at a high PE. A risky stock, but will be fine if/when we get a vaccine and people return to flying. Look at this in 6 months.

COMMENT

Canadian banks The market-sensitive fees (i.e. trading) have really improved. Loan growth going forward may not be as bad as forecast three months ago. True, loan provisions and delinquencies are shooting up, so that's a concern. The hit to capital is another worry. But all in, the banks are priced right. Earnings around around 9-11x, so there's opportunity here with the dividend paid. He hasn't been buying banks since the pandemic, but he's starting to now. But these names when there's doubt.

PAST TOP PICK

(A Top Pick Aug 14/19, Up 179%) Brick and mortar retailers are rapidly migrating online and COVID accelerated this trend. The blew away recent earnings. He sees 300% EPS growth. Bad news: it's super pricey now at 275x 2022 or 37x EV-to-revenue vs. 16x by peers. Buy at $900-1000, not now. It's a must-own name though.

PAST TOP PICK

(A Top Pick Aug 14/19, Down 2%) He bought it for Disney+ which has been an incredible success, hitting its subscriber target of 2024 already. But legacy businesses like theme parks are hurting and will take time to recover. The balance sheet also needs time. The streaming company is propping up the legacy businesses which are coming back in 2021-22. Can't model future earnings.

PAST TOP PICK

(A Top Pick Aug 14/19, Down 24%) It got hit by COVID, but they just beat Q2 by 10%. Online sales are up 120%. Have strong liquidity and a balance sheet. Maybe don't buy it right now, but it's a strong play on global expansion. Trades at a decent PE and pays a good dividend. Hold for now and buy as it dips as the stock bounces around. Expected them to turn around Tim Horton's sooner, but it's still a good brand in Canada.

PARTIAL SELL

Just beat earnings and have increased production. Cheap valuation compared to peers. But it's getting more expensive heading into 2021. There's no growth here, but that goes with the entire oil patch. The real issue is will they survive. Their balance sheet is getting better, but still high for a blue-chip name. You'll be saved if oil and price prices massively spike. Take profits if it's in an unregistered account.

BUY ON WEAKNESS

He sold puts, but the risk happens when this broke out--and it really broke out. It appears to be righting its ship; the ship has turned. This will probably be cheaper and will see volatility between now and when it reports in September. If you buy now, you will see a decent return in a year or two.

BUY

They have strong renewable assets in the U.S. so it should do well if Biden becomes President. Trades at 17.4x PE 2022. There's upside here. He models 10% EPS growth. They just reported some weakness because of COVID and bad weather. They just raised $1 billion equity but is slightly dilutive. Pays a 4.5% dividend yield. They just got added to the S&P 60. so maybe we'll see some catch-up. The trend is towards renewables. They have a decent balance sheet at 17.4x 2021. You can pick away at it now around $18.

Thursday, August 20, 2020 Wednesday, August 19, 2020 Tuesday, August 18, 2020 Monday, August 17, 2020 Friday, August 14, 2020 Thursday, August 13, 2020 Wednesday, August 12, 2020 More...

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Latest Stock Buy or Sell? Make More Informed Decisions!

A Comment -- General Comments From an Expert(A Commentary)

CGI Group (A)(GIB.A.TO)

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