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Today, Chris Blumas commented about whether ENGH-T, AX.UN-T, ABT-N, SJR.B-T, AAPL-Q, BAM.A-T, COST-Q, DLTR-Q, AQN-T, GIB.A-T, DLTR-Q, IFP-T, T-N, NTR-T, BBD.B-T, SU-T are stocks to buy or sell.

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COMMENT

There's been a changing of the guard from tech last year to a strong cyclical rebound this year, led by oil and banks. Healthcare, utilities and energy infrastructure still show some growth. Wait for opportunity, given current high levels, like in Google and Microsoft, otherwise large tech are not buys now. If you own big tech, don't sell, but valuations have risen a lot. As for cash, he's near fully invested. He's not anxious to sell and move cash to the sidelines. Rather, he would recycle value, selling and buying selectively.

BUY ON WEAKNESS

Well-run, have been cutting costs. He owns no energy, and he prefers energy infrastructure like Pembina. Suncor, though, is a good operator, but he's skeptical about the medium-term outlook on oil, because there are countries that are eager to turn on the taps which will add to world supply. For SU, buy on any pullback. The dividend is safe, because they are generating free cash flow due to rising oil prices.

DON'T BUY

A perpetually challenging stock. They now focus on aircraft. Their balance sheet continues to be a problem; they're still burning cash flow even though they're winding down their capex program this year. As demand for business jets increases with reopening, then their balance sheet can improve in coming years, though it's not guaranteed. He would avoid this.

BUY ON WEAKNESS

They recently increased their potash output. They've done a good job streamlining operations. They are worth watching, but he's cautious, because there is low-cost production coming out of eastern Europe. Enter on a pullback at $60. He used to own this, but not now.

BUY

He's taking a serious look at this. They're in a unique situation: they will sell some assets and acquire Discovery, and will cut their dividend in mid-2022 by roughly 40%, though it is high right now. Their new CEO started last year, and things seem to be heading in the right direction. If you want income, you can still invest in this and hold it in an RRSP. It trades around 9x earnings. The Canadian telecoms are a lot more expensive, by comparison at 17-19x PE, but you'd buy these for the dividends.

SELL

Canadian forestry stocks Lumber prices have seen a huge rise this year along with many commodities, given demand but also supply constraints caused by the pandemic. As a group these stocks are discounting $400-500 against lumber futures, which show that prices will come down. He's wary of these stocks. He would sell. The good times won't last forever, and things can change very quickly.

COMMENT

US bank outlook and asset risk Among US banks, there are money-center banks vs. the regionals, and he prefers the former. In terms of balance sheet risk or poor-quality risk assets, the US banks are in a good spot (as are the Canadian ones). The 2008 recession cleansed the balance sheet of all the banks' toxic assets that the banks accumulated for 20 years. So, there hasn't been enough time to accumulate toxic assets again, so their asset quality is very strong now. The big concern is valuation, so given this he prefers the Canadian banks, trading at 12x forward PE (vs. US money-center banks at 14x). The US economy is ahead in the reopening, so the US banks benefit. Banks in both countries offer value, but Canadian ones offer an edge.

PAST TOP PICK

(A Top Pick Jul 08/20, Up 11%) He's still buying it. It pulled back earlier this year due to higher freight costs so they lowered their guidance, but the growth outlook is phenomenal. Their stores perform very well, and they're trying more products above $1. They can do well in a good or bad economy. Resilient.

PAST TOP PICK

(A Top Pick Jul 08/20, Up 27%) He still likes it. A super compounder. Revenue came off a little due to Covid, so growth has lagged peers, but recent quarterly numbers shows growth started to pick up, due to a backlog in bookings. Cash flow remains very strong, so they can buyback shares or complete acquisitions. Likes the valuation.

PAST TOP PICK

(A Top Pick Jul 08/20, Up 12%) Still likes it and could be another top pick. All the utilities have been hit because bond yields have started to rise. But AQN has a strong growth profile through its capex plan, with $5B of its $9B is happening in 2021. AQN's valuation is in line with peers, but boasts a stronger growth profile. This will let AQN keep generating strong earnings even if bond yields rise.

BUY

Sell Costco to buy DLTR? Costco is very well run, but their challenge is always growth. And their forward PE is 35x, which is high. Whereas DLTR trades at 17x, driven by growth and expansion. Long-term, DLTR has earnings growth and multiple expansion and a better total return over 5-7 years than Costco.

DON'T BUY

COMMENT

https://finance.yahoo.com/news/brookfield-announces-record-date-special-104500447.html Today, they announced they will spin off part of their reinsurance business. BAM is a great compounder; you can buy and hold for a long time, because they can compound at a strong rate. Brookfield is a big company with many platforms like renewable energy and real estate, and they always look to optimize valuations. About 15 years ago, Brookfield tried to get into reinsurance, like Berkshire Hathaway. BAM did a similar spin-off a year ago. Their spin-offs perform very well; the market indiscriminately dump shares after them though, so watch this spin-off and wait. This will do very well in time.

BUY ON WEAKNESS

A phenomenal company, but there are two risks: valuation at 24x forward earnings, which is in-line for a software company, not hardware; and its product mix (50% of revenues from their handsets). The 5G upgrade cycle will likely drive Apple's growth for the medium term. If you believe in this, buy on pullback, but everyone knows this 5G upgrade cycle is coming, so there may not be a pullback.

PARTIAL SELL

It's a long-term investment. Rogers wants to take it over, and the shares integrated quickly. They haven't re-rated to the Rogers takeover price. So, this is a way to discount the regulator risk for the deal going through. Let's say there's a 50/50 chance, because regulators may not approve the deal due to concentration of ownership. If the deal doesn't happen, Shaw shares will get hit hard. Best to take profits now and don't wait for the exact Rogers' price. Then, wait to see if the deal goes through; if it doesn't, you can buy back those shares.

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