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TOP PICK
TOP PICK
In a transformation to digital by investing in wealth business acuiqistions. International exposure is being retooled too. Likes it in general since banks have tail winds like yield curve steepening, ability to buy back stocks again, etc. One of the cheaper banks. The wealth business is showing good returns. Good value and volatility measures. (Analysts’ price target is $80.45)
banks
TOP PICK
Likes it for the non-bank financial play. In a bull cycle, one area to look at is broker dealers and asset managers. They are a wealth planner. Relatively new holding for him. Good price momentum and very reasonably priced at 8x enterprise value, 6.8x free cashflow, 16x earnings. Great balance sheet and using it for doing mergers. Fragmented business that can be consolidated. (Analysts’ price target is $249.46)
food processing
BUY
Likes banks in general. TD is on the upper end of price. Likes the good price momentum, reasonable multiple, and return of reserves. The rising yield curve is good for the banks. Mortgage rates have started to go back up again. Payout ratio is good, earnings are good. US exposure is a positive right now. Retail trading has exploded.
banks
COMMENT
Market outlook. Currently focusing on mid and large caps in North American. Markets tend to remain constructive as long as central banks are. You have a receding pandemic in the US and trillions of dollars of fiscal spending that goes directly into the economy. What works may change due to the stimulus. This would be value stocks rather than techs. As a bull market continues, you get a rotation into quality value with good balance sheets.
BUY
Likes it. A cyclical business. Commercial business has rationalized costs for base business and made some acquisitions. Good cashflow. There is a lack of growth but they are solving it with m&a. Valuation is cheap at 6x cashflow and enterprise value. Could be choppy around earnings releases. Overall trend is in a good direction. A long.
publishing
printing
BUY ON WEAKNESS
Hasn't had the same price benefit compared to lumber producers. It is a different but related business. Owns it from a valuation perspective. A cyclical stock that trades below book value, 5x enterprise value, 4x price to free cashflow. Top 5% of cheapness. Price momentum has been held back. A bit stretched on debt but it is okay.
east coast forestry
PAST TOP PICK
(A Top Pick Mar 10/20, Up 37%) Wouldn't buy it today. There are just other US picks with better metrics. Picked it 1 week before the markets bottomed last March. Home builders have very limited inventory. It is increasingly difficult to get building materials. Good return on equity. One of the largest home builders. 8x cashflow and EBITDA. Sold for better opportunities.
contractors
PAST TOP PICK
(A Top Pick Mar 10/20, Up 22%) National diagnostic and testing in US and Canada. Picked this for covid mass testing capabilities. Stock has done reasonably well. Still cheap and cheaper than in March due to growing into valuation. 7.8x EBITDA, 23% ROE and 12x earnings. Great balance sheet. Low pay out ratio, smaller yield.
medical services
COMMENT
Risk is it becoming a momentum machines. Past performance draws in more dollars for a certain time. Mid-Feb and March saw a real sell-off. Be careful of expensive growth stocks. Not convinced they will start another major uptrend. There are more macro influences favouring reasonably priced value stocks. Not a lot of history and no earnings yet. Pure growth story. No metrics to value it on. Sentiment could sour and fall. Manage your risk and be prepared to sell.
Technology
They participate in the spread when the deal is announced. Shaw is trading 24% the price Rogers has offered. This is due to the fear of regulatory intervention. Thinks that the real concern is on the wireless side, and this deal works without the wireless side. They can divest Shaw's wireless side and still be a good deal. Thinks there is a 85% chance of the deal going through. (Analysts’ price target is $37.92)