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COMMENT
How should investors play the US election results? A lot of election related uncertainty is dissipating. At a minimum, the "blue wave" has been taken off the table. Investors had been cheering the fiscal stimulus anticipated by that wave, but simultaneously fearing the strong likelihood of corporate tax increases. Divided government is often a good scenario for the market and the market is responding positively to the likelihood of a change in occupancy at the White House.
COMMENT
What about the interest-sensitives? Not all are created equal. Utilities or pipelines own stable, recession-resistant assets with predictable cashflows. If cashflows are valued at a discounted rate, the value goes up. On the other hand, financials are favoured by a steeper yield curve. But a recovering economy would help their loan losses roll over.
STRONG BUY
Great company. Manage long-duration, real assets like infrastructure, utilities, renewable energy, real estate. Benefit from lower interest rates. Excellent buyers and operators of global assets. Permanent generator of cashflows. Projected 45B of free cashflow over the next decade. Stock's pulled back on real estate concerns, but it excels at buying distressed assets. Buy it all day, every day.
Brian MaddenOwned
managementdiversified
COMMENT
Great company. Global powerhouse. Size and scale drives procurement advantage on fuel, plus in-store merchandise sells at a huge markup. Great acquirer. Today's acquisition in Asia, though financially small, is strategically important. More good news ahead for this company.
Brian MaddenOwned
food stores
HOLD
Juicy dividend, which grows steadily. Predictable business model. Today's results seem fine. Share price is overreacting. Some decline in monthly revenue. One to own for steady and growing income over time.
Brian MaddenOwned
telephone utilities
PAST TOP PICK
(A Top Pick Nov 13/19, Down 60%) Still likes the company. They've controlled what they can such as cutting the dividend. Still financially strong, generates free cashflow at $35 and above, payout ratio is manageable. Stampede into ESG investing has impacted share price. Oil will come back when the economy does. Good entry point here.
Brian MaddenOwned
integrated oils
PAST TOP PICK
(A Top Pick Nov 13/19, Up 4%) Essential service, pandemic-resistant business model. High ROE. Investments in Central America could do well over time. Continues to like the growth prospects.
Brian MaddenOwned
Consumer Products
PAST TOP PICK
(A Top Pick Nov 13/19, Down 21%) Suffering from commodity cyclicality. Tarring and feathering of perceived non-ESG-friendly businesses. With White House changing hands, Line 3 becomes even more valuable. Yield is safe. Also has a small renewable business. Great company, great entry point, great income while you wait.
Brian MaddenOwned
oilgas pipelines
BUY
Good company. Discounted. He thinks the dividend is sustainable. No red or yellow flags of financial risk. Fairly consistent mid-stream business, but beta is somewhat high. Trades at 1.5x book value, still 45% off its highs. Would be comfortable buying, based on quality of the business and compelling valuation. Yield is 10%.
oilgas
BUY
Writeoff of phosphate business was needed, and just a small part of overall business. Potash and nitrogen move the needle. Price will be weak at the trough of a recession, and will recover. Torque to a recovery will be powerful and shares should rerate higher. Best thing is its downstream retail division, increasingly technologically sophisticated. Excellent business.
Brian MaddenOwned
agriculture
BUY
Dividend is safe. All banks are under pressure with their net interest margin. Best wealth management franchise in Canada, and it should continue to grow. Great capital markets business that's a top 10 in the world. Well balanced geographically. Expect close to double-digit returns most years. Buy comfortably today.
Brian MaddenOwned
banks
BUY
Moved nicely since the summer, but more in the tank. Wildly cyclical. Recent earnings not very good, but tailwinds should improve things fourth quarter. Contract prices for methanol are up.
Brian MaddenOwned
chemicals
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